The fifth installment in a six-part series, Outten & Golden’s Whistleblower & Retaliation Practice examines the securities violations at the center of the SEC’s current enforcement agenda.

In April 2026, David Woodcock took the helm as Director of Enforcement at the Securities and Exchange Commission. In his first public remarks, Director Woodcock outlined a traditional enforcement agenda centered on high-impact cases involving six key areas: Offering Fraud, Accounting and Disclosure Fraud, Market Manipulation, Insider Trading, Private Funds, and Cross-Border Fraud.

This installment explores one of the most fundamental areas of securities regulation: accounting and disclosure violations. As corporate financial reporting failures continue to make headlines, the SEC remains focused on identifying and addressing misconduct that undermines the accuracy and reliability of information available to investors. These matters accounted for approximately 12% of SEC enforcement filings in FY2025, reflecting the Commission’s continued emphasis on financial reporting integrity, transparency, and investor protection.

Key Facts

• Accurate financial reporting is essential to fair and efficient markets. Accounting and disclosure fraud occurs when companies manipulate financial results, conceal material information, or fail to maintain adequate internal controls, undermining investor confidence and market integrity.
• The SEC continues to prioritize accounting and disclosure violations as a core enforcement focus. The agency has placed increasing emphasis on strong internal controls, reliable corporate disclosures, and individual accountability for executives and other gatekeepers responsible for financial reporting.
• Whistleblowers play a critical role in uncovering accounting and disclosure fraud. Because financial misconduct is often hidden within internal records, reporting systems, and corporate disclosures, insider information can help regulators identify violations that might otherwise go undetected.

What Is Accounting and Disclosure Fraud?

The SEC’s mission rests on a straightforward principle: investors must have access to accurate, complete, and timely information when deciding where to invest. When companies manipulate financial results, conceal material information, or fail to maintain adequate internal controls, they undermine investor confidence and the integrity of the markets.

For decades, accounting and disclosure violations have been a cornerstone of SEC enforcement activity. Public companies are required to provide financial statements and other disclosures that accurately represent their financial condition, performance, and risks. Violations occur when companies or individuals fail to meet those obligations through intentional misconduct, reckless conduct, or inadequate oversight.

Examples of accounting and disclosure violations include:

• Revenue recognition fraud: Recording revenue too early or inappropriately to inflate sales or earnings.
• Manipulation of financial statements: Misstating expenses, assets, liabilities, reserves, or other financial information.
• Improper accounting treatment: Applying accounting principles incorrectly to achieve a desired financial outcome.
• Failure to maintain accurate books and records: Inadequate documentation or recordkeeping that prevents accurate financial reporting.
• Weak internal controls: Failing to implement systems designed to identify and prevent material misstatements.
• Failure to disclose material information: Omitting important facts, making misleading statements, or failing to update prior disclosures regarding issues such as business risks, financial challenges, executive compensation, or significant legal and regulatory developments.

The SEC’s Focus: Emerging Themes

Reliable financial reporting is the foundation of the public markets. Investors, analysts, lenders, and regulators all rely on corporate disclosures to assess performance, risk, and long-term prospects. When those disclosures are inaccurate or incomplete, the impact extends beyond individual investors and can erode broader market confidence.

The SEC has placed increasing emphasis on strong internal controls and compliance systems that can identify issues before they turn into significant reporting failures. Enforcement actions often address not only the underlying misstatement but also the processes — or lack thereof — that allowed inaccurate information to reach investors.

The Commission has made clear that companies cannot rely solely on correcting errors after the fact. Effective compliance requires systems that can detect potential issues early and promote accurate, reliable reporting.

The SEC has also continued to scrutinize the use of alternative performance metrics, including adjusted earnings and EBITDA calculations. While non-GAAP measures can provide investors with valuable insight, they can become problematic when companies use them selectively or present them in ways that create a misleading impression of financial performance.

Technology is also playing an increasingly important role in the SEC’s enforcement efforts. The Commission has expanded its use of data analytics to identify potential reporting irregularities and market risks. The Accounting Quality Model (AQM), sometimes referred to as “RoboCop,” uses analytics to detect anomalies in financial reporting. The Market Information Data Analytics System (MIDAS) monitors trading activity and market data across exchanges, and the agency continues to explore ways to incorporate artificial intelligence tools to enhance market surveillance capabilities.

The SEC has also signaled that individual accountability remains a priority. Executives, finance professionals, and other gatekeepers involved in preparing public disclosures may face enforcement action when they knowingly or recklessly permit inaccurate information to reach investors.

Continued Enforcement of Accounting and Corporate Disclosure Misconduct

Accounting and disclosure matters continue to represent a significant portion of SEC enforcement activity and frequently result in substantial monetary penalties. Recent examples include:

• In January 2026, the SEC settled charges against Archer-Daniels-Midland Company and former executives related to allegations that the company inflated the performance of a key business segment. The settlement included monetary sanctions exceeding $40 million.
• In 2022, the Commission approved a distribution plan for a $200 million penalty that General Electric previously agreed to pay in December 2020 to resolve allegations that it misled investors regarding its power and insurance businesses.
• Between 2021 and 2025, the SEC brought enforcement actions involving disclosure and internal control failures against more than 100 broker-dealers, investment advisers, and credit rating agencies. The matters resulted in cumulative monetary sanctions exceeding $2 billion.

The Role of Whistleblowers in Detecting and Deterring Misconduct

Because accounting violations are often hidden within financial records, internal systems, and reporting processes, employees and other insiders are frequently among the first to identify potential misconduct.

Whistleblowers have played an important role in uncovering accounting and disclosure violations. In recent years, whistleblower tips have contributed to a significant percentage of SEC accounting-related enforcement actions, reinforcing the importance of insiders having access to experienced counsel when evaluating whether and how to report potential violations to the Commission.

The SEC Whistleblower Program continues to provide incentives for individuals with credible information about securities violations to come forward while protecting eligible whistleblowers from retaliation. The agency’s 2026 Final Orders for Whistleblower Award Determinations offer a revealing look at how the program continues to mature.

Looking Ahead

Despite speculation that the SEC may take a narrower enforcement approach, accounting and disclosure violations remain a core component of the Commission’s investor protection mission.

Accurate financial reporting is essential to maintaining trust in the capital markets. Under current leadership, the SEC has focused on pursuing cases with meaningful impact rather than simply increasing enforcement volume. The message to public companies, executives, and financial gatekeepers remains clear: misleading investors carries serious consequences.

Blowing the whistle is a courageous act—but it doesn’t have to be a solitary one. At Outten & Golden, we’ve helped whistleblowers across industries navigate the legal process, protect their careers, and hold wrongdoers accountable. If you’ve witnessed fraud and are unsure what to do next, call us. We’re here to help you take the next step—safely, strategically, and with confidence.