The Securities and Exchange Commission SEC is the regulatory entity in charge of filing civil and criminal actions against accounting firms that issue fraudulent financial statements to deceive investors who rely on that information when making decisions. Several accounting firms have reached agreements to settle actions with the SEC. For example, the SEC censured Deloitte for improper professional conduct under Rule 102(e) of the SEC's Rules of Practice in connection with Deloitte's audit of Adelphia's financial statements. Without admitting or denying the allegations, Deloitte agreed to pay $25 million.

Among other things, the SEC, determines the use of forfeited property and use it to provide at least, partial compensation to victims of fraud. The SEC creates funds that are administered in accordance with the Department of Justice, DOJ, procedures. Victim Fund contemplates compensating, on a pro-rata basis, victims of fraud that held eligible securities. Regarding the infamous case of Adelphia Communications, for example, two funds were created: The SEC fund and the Adelphia Victim Fund. According to the SEC, the Special Master has distributed over 105,500 petition forms and has received over 12,000 petitions claiming total loss well in excess of the combined balances in the Adelphia Victim Fund and the SEC Fund. The Special Master has been notifying petitioners of any deficiency in their petitions on an ongoing basis. The Special Master estimates that distributions would be ready to be made sometime in the first half of 2009.

The SEC expects that combining the SEC Fund with the Adelphia Victim Fund and distributing the SEC Fund in accordance with the Adelphia Victim Fund's procedures is the most efficient, fair, and reasonable method for distributing the SEC Fund to victims of Adelphia's fraud. The SEC stated that his procedure will ensure that all victims are treated consistently without the possibility of double- dipping between the two funds. More information for victims is provided at https://www.AdelphiaFund.com

It must be very disappointing for victims after losing their money to undergo the hassle of these proceedings. The SEC and the State Attorney’s office in charge of identifying and notifying potential victims do their best when it comes to applying equity principles in distributing resources in those funds.

According to a Press release issued by the United States Attorney Southern District of New York, from the late 1990s through 2002, JOHN and TIMOTHY RIGAS misappropriated billions of dollars from ADELPHIA --then the nation's sixth-largest cable television company --for the benefit of themselves and other members of the RIGAS family. Certain cable companies that were privately owned by JOHN RIGAS, TIMOTHY RIGAS, and other members of the RIGAS family --but managed by ADELPHIA --were purchased and/or upgraded with funds wrongfully taken from ADELPHIA. These "Rigas Managed Entities" ("RMEs") were so highly leveraged that they did not generate enough cash to pay their own operating expenses and interest charges, and were thus effectively subsidized by cash advances from ADELPHIA. ADELPHIA disclosed that it was liable for more than $2 billion in borrowings attributed to certain RMEs that were not reflected in ADELPHIArs prior SEC filings and financial reports. Eventually, ADELPHIA filed for bankruptcy protection on June 25, 2002.

Forensic accountants help in investigating instances where accountants together with other executives, engage in a wide array of fraudulent accounting practices and other misconduct that have a cumulative net impact on reported revenue and on its reported pre-tax earnings. For example, a former president and CEO of company WXY, and others at the company fostered an aggressive “numbers driven” corporate culture obsessed with meeting financial projections. To boost WXY stock price, the CEO imposed and demanded compliance with unrealistic revenue and other targets, and other executives knew that he expected them to achieve those figures by any means necessary. Instances such these end up in manipulation of financial information and ratify the theory of the triangle of Fraud, which has three components: opportunity, pressure, and rationalization. It is simple for an executive rationalize that he or she is meeting his or her goals set forth by CEO. The pressure part is represented by the need of meeting financial expectations.

Compromising professional standards on behalf of greedy organizations has far-reaching consequences for those who engage in dishonest practices in detriment of investors relying in financial information.