* SEC expects more progress in harnessing technology
* Tech tools may help spot "earnings management" -SEC
* Enforcement staff shifting away from credit crisis cases
By Suzanne Barlyn and Dena Aubin
NEW YORK, April 26 The top U.S. securities
regulator will ramp up its use of technology to analyze public
securities filings for potential accounting abuses, one of its
enforcement heads said on Friday.
George Canellos, who was named co-director of the U.S.
Securities and Exchange Commission's enforcement division on
Monday, said the commission will look at publicly traded
companies for instances of "earnings management" - when firms
take advantage of gray areas in accounting rules to make
earnings look better than they really are.
He made the remarks in New York at a seminar about
regulatory enforcement trends sponsored by the Practising Law
Institute, an organization that provides continuing education
classes for lawyers.
Canellos said the effort would occur over the next two
years, and would be a new application of technology it has
already used to find aberrant trading patterns and insider
trading at hedge funds.
"There are many other projects of this nature," Canellos
said, noting that the SEC intends to draw data from EDGAR, the
electronic data system companies use for SEC filings, to compare
companies' financial performance data and analysts'
expectations. Unusual findings that deviate from the norm could
signal that a company is managing earnings.
"It's very much in the planning stages," Canellos told
Reuters after his remarks. "It's an area where we're hoping to
make great strides."
The SEC in recent years has been trying to make corporate
financial filings easier to analyze. It now requires companies
to tag filings with so-called XBRL computer codes, akin to the
bar coding used by retailers.
With machine-readable tags on company data, numbers that
often get buried in reams of footnotes can be quickly culled.
Canellos, when questioned by a moderator, declined to outline
specific enforcement priorities, citing the agency's recent
New SEC Chairman Mary Jo White was sworn in on April 10.
Canellos' co-director, Andrew Ceresney, a former federal
prosecutor and partner at law firm Debevoise & Plimpton LLP,
starts on Monday, Canellos said.
The SEC, however, will shift away from cases related to the
2008 credit crisis and to those more relevant to current
markets, Canellos said. Its focuses will include checking for
abuses among fiduciaries overseeing risk on Wall Street, he
Canellos was the enforcement division's acting director
since January and deputy director since June 2012. He served as
director of the SEC's New York regional office from 2009 to