In two recent cases involving DHB Industries and InfoUSA, the SEC has brought enforcement actions against audit committee members for ignoring accounting “red flags.” This article explores the role of audit committees and the charges filed in these two cases. Are they the start of a new trend for the Enforcement Division and will they discourage people from serving on audit committees? 

This article was originally published by Bloomberg Finance L.P. in the Vol. 5, No. 31 edition of the Bloomberg Law Reports – Securities Law. Permission for article reprint has been granted. 

Eugene R. Licker is a partner and co-chair of the White Collar Criminal Defense, Corporate Compliance and Investigations Practice Group in the New York office of Loeb & Loeb LLP. He regularly represents individuals and entities in criminal, SEC, and other governmental and regulatory investigations and proceedings and matters relating to securities and other fraud, tax evasion, and other alleged misconduct. Mr. Licker has represented numerous audit committees and others in connection with internal or independent investigations.. He can be reached at elicker@loeb.com or 12.407.4157.