Intensifying its efforts to deter accounting fraud, the
Securities and Exchange Commission
named a prominent Washington lawyer to serve as chief accountant for its enforcement division and to help lead its new financial fraud task force.
Charles D. Niemeier, 43, will leave the firm
Williams & Connolly
, where he has been a partner, to join Paul R. Berger, the SEC's associate director, in leading the commission's financial fraud task force. In March, Arthur Levitt, the SEC's chairman, described plans to create a then-unnamed arm of the enforcement division devoted to fighting accounting abuses and "earnings management."
Levitt has devoted an increasing amount of attention and resources to financial fraud for the past two years on financial fraud as a glut of financial information has come available on the Internet and as ordinary Americans have approached investing with a zealous individualism.
"If the public can't trust the numbers they're given by a company, there's a major integrity problem," said Chris Ullman, an SEC spokesman. "We are a disclosure-based system."
But the commission, with a total of 2,900 employees including 900 lawyers and accountants devoted to all areas of enforcement, can not hope to monitor the disclosures of thousands of publicly traded companies. The new task force, including six lawyers and four accountants hired from both inside and outside the commission, will take few cases.
"We rely heavily on the deterrent effect of the world finding out what happens when you commit financial fraud and you get caught," Ullman said.
In a telephone interview, Niemeier said he hopes to focus on "complex and novel" legal cases with "an emphasis on financial fraud." Though he said he does not wish to limit the team's focus, he added that it would likely take cases that seem fit for creative or experimental investigative techniques and law enforcement methods.
That would include the extraordinary devotion of resources the commission first attempted in bringing a 1999 case against
, a Toronto-based theatrical producer. The commission brought and settled within six months a case against the company and six of its former employees, who were accused of inflating earnings reports. The company's co-founders were also indicted on criminal charges.
Financial fraud cases, among the most time-consuming and difficult to prove, usually take a few years to come to conclusion. The commission brings 90 to 100 financial fraud actions a year, out of about 500 total enforcement actions.
As an accountant and a lawyer, Niemeier is "uniquely qualified" to lead the task force, the SEC said in a statement. "The creation of the Financial Fraud Task Force affirms in spirit and in fact that improving the quality of our financial reporting system is a top priority of the commission," Levitt said.
Niemeier is best know for his work in helping prominent political figures, including former House Speaker Thomas Foley and former Vice President Dan Quayle, investigate corporate boards.