Wildcatting

What is Wildcatting?

Wildcatting casually alludes to a practice established by the Securities and Exchange Commission (SEC) that calls for the survey of a whole industry at whatever point critical problems are found inside a couple of companies in that industry.

Grasping Wildcatting

The SEC might investigate quite a few critical issues with a specific firm, including accounting inconsistencies, executive compensation and the utilization of derivative transactions, and parlay this investigation into an investigation of different firms inside a similar industry.

This term is derived from the oil industry, where companies drill test wells for oil in neglected or wild areas. The intent of this practice in accordance with the securities industry is to test industries or practices about which the SEC has concerns, even assuming that there is no obvious sign of bad behavior. Under this initiative, the SEC has led investigations on numerous industries, including the oil, cable TV and video game industries. This policy arose after the Sarbanes-Oxley Act of 2002, which gave greater transparency to investors.

Features

• Wildcatting is a term utilized in the oil industry, where companies drill test wells for oil in neglected or wild areas.
• Wildcatting arose after the Sarbanes-Oxley Act of 2002, which gave greater transparency to investors.
• Wildcatting casually alludes to a practice established by the SEC that calls for the survey of a whole industry at whatever point critical problems are found inside a couple of companies in that industry.