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The U.S. Securities and Exchange Commission ("SEC") recently filed a law enforcement action for failure to disclose loss contingencies arising out of a pending U.S. Department of Justice ("DOJ") investigation. This is the first SEC case that directly charges violations of the duties arising out of the requirements to disclose loss contingencies as that term is defined in the accounting literature. The case highlights a difficult issue with which management and counsel are often confronted during ongoing law enforcement investigations: disclosure duties arising from findings made in management’s own internal investigation into the facts, and duties concerning the disclosure of such findings to the government.

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