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SEC Enforcement and Public Companies – 2020 Key Cases and What We Expect in 2021

January 13, 2021

Most media accounts suggest that the incoming Biden administration will usher in a more “aggressive” SEC enforcement posture, with renewed emphasis on investigating potential fraud and controls deficiencies at public companies. SEC Enforcement may face some short-term headwinds to this approach. A dramatic increase in tips, complaints, and referrals during the pandemic, as well as COVID-19-related delays that may extend the 24-month average lifetime of SEC enforcement investigations, will likely require the SEC to selectively allocate stretched resources in 2021. Where are the limited resources likely to go beyond the more standard accounting, revenue recognition, and disclosure cases that the SEC regularly investigates and prosecutes? Recent enforcement activity points to several areas of interest to the SEC, and provides a valuable window for public companies into the SEC’s methods and priorities.