Is the SEC pulling back on accounting and auditing enforcement?

The SEC has taken a sharp turn in its enforcement strategy. According to the latest Cornerstone Research Report, accounting and auditing cases plunged 46% in FY 2024, dropping to just 45 cases—down from 83 last year. But here’s the twist: penalties skyrocketed to $770 million, the highest since 2021. Instead of spreading its focus across multiple cases, the SEC is going all-in on fewer but more aggressive actions. Nearly half of these cases (22) came in Q4, with a third rushed in September before the fiscal year ended. While companies might be tempted to breathe a sigh of relief, they shouldn’t get too comfortable—because when the SEC does act, it’s swinging harder than ever. So, is this a retreat? Or just a new, more ruthless game plan? The numbers suggest less oversight but more severe consequences for those who end up in the crosshairs. 

Why the SEC Is Playing It Safe For Now 

Well, the Jarkesy ruling (June 2024) changed the game, forcing the agency to take cases to jury trials instead of handling them in-house. That slowed things down big time, leading the SEC to drop six investigations. At the same time, the SEC is focused on other fires—crypto fraud, ESG disclosures, and financial misconduct—leaving traditional accounting and audit enforcements lower on the priority list. But make no mistake: fewer cases don’t mean less risk. It means that when enforcement does happen, the stakes are even higher. The SEC isn’t looking for small wins anymore—it’s waiting for big, high-profile takedowns with jaw-dropping penalties. And it’s clearly visible in below data: 

Source: Cornerstone Research

U.S. Firms Get a Pass, But Global Players Beware 

If you’re a U.S. company, things might feel a little more relaxed—SEC enforcement against domestic firms dropped 56%. But if your business is international, brace yourself. SEC actions against non-U.S. companies jumped 18%, with a heavy focus on Canada, the UK, China, Australia, and Colombia. That’s a clear shift toward cross-border crackdowns, even as local oversight loosens. Global businesses need to tighten compliance now because regulatory unpredictability is the new norm. The SEC may be going easy on U.S. firms, but it’s shifting its attention overseas. If your company operates internationally, don’t assume you’re safe. With higher fines and geopolitical tensions shaping enforcement, the cost of non-compliance could be brutal. Where the SEC steps back, global risk steps up. And if you’re caught in that web, it won’t be cheap. 

Brace for the Rulebook Rewrite

While the leadership is shifting—Gary Gensler is out, and Trump-nominated Paul Atkins is likely stepping in. And Atkins has historically favored deregulation, meaning SEC enforcement could slow down even further. While the SEC might ease up on hardcore accounting enforcements, it’s shifting its focus toward financial disclosures and transparency. The new reality? Regulatory changes don’t eliminate risk—they reshape it. Companies can’t afford to sit back and assume they’re in the clear. With the PCAOB enforcing higher standards and fines growing, compliance needs to be proactive, not reactive. If your audited company falls under investigation, fewer cases won’t mean less risk—it means fewer chances to slip through the cracks. The SEC isn’t tossing out the rulebook—it’s just rewriting it with fewer, but far more punishing, chapters. 

Compliance Isn’t Optional

The SEC’s shifting strategy is a double-edged sword. Yes, fewer companies are getting hit, but those that do are facing record-breaking penalties. For professionals, this creates a regulatory minefield—one where both financial reporting and audits are under intense scrutiny. The takeaway? Playing it safe isn’t just smart—it’s survival. Professionals assuming that a lighter SEC means fewer compliance risks could face crippling fines if enforcement does strike. Better to tighten internal controls, and make sure your financial reporting is airtight. The regulatory winds are shifting, and companies need to stay sharp, stay compliant, and stay out of the SEC’s shrinking—but increasingly high-stakes—crosshairs. Unlock exclusive insights, expert opinions, and the latest industry trends—straight to your inbox. Subscribe today and stay informed!