According to analysis by Cornerstone Research, the numbers of class action securities suits with accounting-related allegations increased from 47 in 2013 to 65 last year -- a 47 percent increase.
As a percentage of securities lawsuits, the 69 actions alleging accounting issues represented 41 percent (69 of 170), compared with 28 percent in 2013 (47 of 166) and 30 percent in 2012 (45 of 151).
Under Cornerstone's criteria, an "accounting-related" class action includes allegations related to GAAP or auditing violations, or weaknesses in internal controls over financial reporting.
Although the overall number of actions has remained relatively consistent, the SEC's expanded emphasis on accounting fraud seems to have played a role in increasing accounting-related class actions. Last year, 18 accounting case filings referred to an SEC inquiry or action, compared with five in 2013.
“The surge in accounting-related securities class actions is particularly notable given the lack of change in the overall level of securities class action filings in the past year,” said Elaine Harwood, a vice president of Cornerstone Research and head of the firm’s accounting practice, in a statement.
“The increase appears to be, at least in part, a result of the SEC’s heightened focus on accounting-related fraud as demonstrated by the substantial growth in accounting case filings that refer to inquiries or actions by the SEC.”
Cornerstone said there were 63 securities class actions settled last year, down slightly from 66 in 2013.
Among the cases settled last year, 44 involved accounting allegations, the same number as the year before.
Restatements Attracting Attention
The Cornerstone analysis also indicated a slightly stronger link between accounting-related class actions and restatements. In their findings, 29 class actions (or 42 percent) cited restatements, compared with 19 (or 40 percent) in 2014.
The increase matches findings by Audit Analytics () that the number of restatements by accelerated filers reached 309 last year, compared with 290 in 2013 and 284 in 2012.
Internal Controls Allegations
Nearly two-thirds (60 percent) of the 2014 cases included allegations of internal controls weaknesses. Those 41 actions compared with 34 in 2013 and 29 in 2012.
Of the 29 cases in 2014 that included a restatement, two in three also included allegations of weaknesses in internal controls.