Wildcatting

DEFINITION of 'Wildcatting'

A policy instituted by the Securities and Exchange Commission (SEC) that calls for the review of an entire industry whenever critical problems (such as accounting fraud) are found within one or two companies in the industry.

The origins of this term are derived from the oil industry, where companies drill for oil in unexplored or wild areas.

BREAKING DOWN 'Wildcatting'

The SEC based this policy on the principle that if one company is committing fraud there is a good chance that others are as well. Under this direction, the SEC has conducted investigations on many industries including the oil, cable TV and video game industry. This policy emerged after the Sarbanes-Oxley Act of 2002, which provided greater transparency for investors.

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