Focus on EnforcementSEC Launches New Financial Reporting Unit-Accounting and auditing enforcement by the SEC fell sharply in 2025, reaching its lowest level in nearly a decade, according to new data from economic and financial consulting firm Cornerstone Research. The SEC initiated just 10 accounting and auditing enforcement actions last year, a 68% decline from 2024 and far below historical averages. Monetary settlements also plunged to $31 million, down from $907 million the prior year. Nearly all the penalties imposed occurred during the final weeks of former SEC Chair Gary Gensler’s tenure. Cornerstone attributes the decline partly to leadership transitions at both the SEC and PCAOB, along with last year’s government shutdown that disrupted operations. Only four enforcement actions were initiated after Paul Atkins became SEC Chair in April 2025, marking a significantly slower start compared with prior Chairs. PCAOB enforcement activity also dropped to 37 actions, an 18% decline from 2024 and its lowest level since 2021, according to Cornerstone. But things are about to change, as Atkins refocuses personnel toward his enforcement priorities. On August 5th, the SEC announced it has established a Financial Reporting and Accounting Unit within its Division of Enforcement that will significantly escalate the agency’s scrutiny of public‑company financial reporting. The new unit will house a dedicated team of enforcement professionals consisting of attorneys and accountants focused exclusively on accounting fraud, financial reporting failures, and misconduct by both issuers and auditors. To observers of the SEC under Atkins, this additional layer of financial reporting scrutiny is no surprise. Since taking the helm, he has repeatedly stated his commitment to core enforcement principles and a “back to basics” approach that, he has said, would ensure that financial disclosures meet the needs of investors. The SEC describes the new unit as a structural investment designed to enhance enforcement capacity and sharpen its focus on core mission areas. For public companies, the implications are clear: more enforcement activity, deeper investigations, and closer coordination across SEC divisions. The agency has signaled that the new unit will work closely with the Division of Corporation Finance and the Office of the Chief Accountant, meaning that routine filing reviews, comment‑letter exchanges, restatements, and error corrections may more readily trigger enforcement referrals, as those divisions share more information. The Unit’s broad mandate also extends beyond issuers. External auditors, individual accountants, controllers, CFOs, and audit committee members may face heightened scrutiny, reflecting the SEC’s view that gatekeepers play a critical role in maintaining the integrity of financial reporting. In an interview with Bloomberg Tax, David Woodcock, Director of the Enforcement Division, said the new Unit will coordinate closely with the PCAOB, but would not take over that Board’s own enforcement caseload. For more information: AND: Driven by AI Related ClaimsSecurities Class Action Filings Surge in Early 2026Securities class action lawsuits accelerated sharply in the first half of 2026, rising 30% to 121 filings compared to the same period last year, according to new data from Cornerstone Research and the Stanford Law School Securities Class Action Clearinghouse. The increase coincided with a wave of lawsuits targeting artificial intelligence companies and alleged misconduct tied to emerging technologies. Cornerstone and Stanford report that 15 AI‑related class actions were filed between January and June; already putting 2026 on pace to nearly double last year’s total. Technology-sector filings jumped from nine to 24 cases, while litigation against non‑U.S. companies surged, driven largely by alleged “pump‑and‑dump” schemes. Filings against foreign issuers are projected to reach 46 cases by the end of the year, twice the number seen in all of 2025. The report also highlights a sharp rise in alleged investor losses. Cornerstone’s Disclosure Dollar Loss (DDL), a measure of how much a company’s market value fell by the end of the period investors claim they were misled, rose 77%, with AI‑related cases accounting for nearly three‑quarters of that total. In simple terms, DDL reflects the drop in value investors experienced when the truth allegedly came out. Meanwhile, the Maximum Dollar Loss (MDL), the decline from a company’s highest market value during the class period to its value at the end, nearly tripled its historical average. MDL captures the full arc of investor exposure, showing how much value evaporated from peak to final disclosure. Stanford Law Professor Joseph Grundfest, a former SEC Commissioner, and co-founder of the Securities Class Action Clearinghouse at Stanford, noted that AI cases represent a small share of filings but a disproportionately large share of investor losses, underscoring how a handful of high‑impact matters can reshape litigation trends. For more information: Stop & DeleteFinal Action on Beneficial Ownership RecordsIn a sweeping reversal of a major anti–money‑laundering initiative, the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) has issued a final rule permanently eliminating beneficial ownership reporting requirements for U.S. companies and U.S. persons under the Corporate Transparency Act. Effective August 14, 2026, the rule not only ends future reporting obligations but also states that FinCEN will delete all previously collected personal and company information from its beneficial ownership database, marking one of the most significant regulatory rollbacks for small businesses in recent years. Treasury Secretary Scott Bessent called the move “a victory for common sense and American small businesses.” FinCEN’s decision caps a turbulent period that began when the agency first implemented beneficial ownership reporting in early 2024. The rules required millions of small businesses to disclose sensitive personal information, including names, addresses, and identification numbers, sparking widespread backlash from U.S. companies that argued the mandate was intrusive, costly, and posed cybersecurity risks. After extensive litigation, political pressure, and an interim rollback in March 2025, Treasury has now made the exemption permanent. Under the final rule, U.S. companies and U.S. persons are fully exempt from BOI reporting, including any obligation to update or correct previously submitted data. FinCEN also will erase records tied to U.S. passports, driver’s licenses, or other indicators of U.S. person status. However, foreign‑based firms operating in the United States remain subject to BOI reporting and must continue disclosing beneficial ownership information for foreign individuals. For additional information regarding the final rule and requirements for foreign entities and individuals, see: The slow demise of Snail MailSEC Unveils Reg E-DeliveryThe SEC has unveiled Regulation E‑Delivery, a proposal that would make electronic delivery of shareholder documents the default method of communication for public companies, funds, and broker‑dealers. In other words, unless investors specifically ask for paper, their annual reports, proxy statements, prospectuses, Form CRS disclosures, and trade confirmations will arrive digitally. SEC Chairman Paul Atkins called the shift “a stride toward a regulatory framework suitable for the modern era,” saying that default paper delivery “should be a relic, not a standard” in an age of AI and blockchain. The SEC estimates the new reg could save issuers, intermediaries, and investors hundreds of millions of dollars annually in printing and postage costs, money that currently goes toward producing documents many investors never open. If, however, you’re someone who truly loves the feel and smell of a freshly printed annual report, the regulation also includes a transition period. Investors currently receiving paper would get two mailed notices before being switched to E‑Delivery, thus preserving the right to opt out. So, everyone should be happy… except for printers and maybe the Post Office. For more information: WEINBERG NEWSWeinberg Makes ListLA Times Business “Top Accounting Firms”We are pleased to announce that Weinberg & Company has been included in the Los Angeles Times’ B2B Publishing Business Magazine’s annual “Top Accounting and Business Advisory Firms” List for 2026. The List appears in the August 16, 2026 edition of Business which ranks the Top 40 firms in Los Angeles County. “We are so pleased to be included in this very prestigious list,” said Corey Fischer, Firm Managing Partner, adding, “It is because of the excellent work of each professional in our firm.” In addition to this LA Times ranking, Corey individually has been recognized in the Los Angeles Times’ B2B Publishing Banking & Finance Visionaries 2024, 2025 and 2026 editions, which feature “The Region’s Financial Sector Leadership”.
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