Ruling Toughens Claims vs. Fiduciaries

A recent ruling from the 3rd U.S. Circuit Court of Appeals could make it significantly easier for bankruptcy trustees to sue directors and officers for alleged breaches of their fiduciary duties, according to The Legal Intelligencer.The ruling stems from a lawsuit against the former officers and ...

By Stephen Taub • Aug. 8, 2005

Regulators Eye Berkshire Hathaway Accounting

Berkshire Hathaway has announced that regulators are looking into accounting issues related to certain reinsurance transactions.The conglomerate controlled by legendary investor Warren Buffett disclosed in its quarterly earnings filing that governmental authorities are inquiring about “the accoun...

By Stephen Taub • Aug. 8, 2005

Enron Investors Press Merrill Lynch

Investors trying to recover lost money from the bankruptcy of Enron Corp. are turning up the heat on Merrill Lynch & Co.William Lerach, whose law firm represents the University of California, the lead plaintiff in the class-action case, has asked the judge presiding over Enron’s bankruptcy to...

By Stephen Taub • Aug. 8, 2005

DaimlerChrysler Bribery Charges Probed

DaimlerChrysler is reportedly being investigated by several regulators in at least two countries.The U.S. Justice Department is probing charges that members of the automaker’s embattled Mercedes unit paid bribes in at least 12 countries and that senior executives may have been aware of the practi...

By Stephen Taub • Aug. 5, 2005

Four More Insurance Execs Plead Guilty

New York State Attorney General Eliot Spitzer has racked up another four guilty pleas from insurance executives in his nearly two-year investigation into abuses in the insurance industry, according to published reports. Three of the executives are from Marsh & McLennan Cos. and the other is f...

By Stephen Taub • Aug. 4, 2005

Enron Settlements Hit Record $7 Billion

Canadian Imperial Bank of Commerce’s agreement late yesterday to pay $2.4 billion to settle a securities fraud class-action suit stemming from Enron Corp.’s bankruptcy brought the total amount recovered in litigation involving the company to $7.12 billion, according to William Lerach of Lerach Co...

By Stephen Taub • Aug. 3, 2005

Cendant’s Shelton Gets 10-Year Sentence

E. Kirk Shelton, a former vice chairman of Cendant Corp., was sentenced to 10 years in prison for his role in an accounting scandal during the 1990s that cost investors more than $3 billion, according to the Associated Press.He was also ordered to pay $3.27 billion to Cendant, the travel company ...

By Stephen Taub • Aug. 3, 2005

Time Warner Reserves $3 Billion

Time Warner Inc. has reached an agreement on a settlement of class-action lawsuits stemming from its merger with AOL and a related accounting scandal and set aside $3 billion in reserves to resolve litigation.Under the proposed settlement of the class action, Time Warner will pay $2.4 billion int...

By Stephen Taub • Aug. 3, 2005

Spitzer Slapped Moody’s with Subpoenas

Moody’s Corp. has received two subpoenas from New York State Attorney General Eliot Spitzer seeking documents and information concerning activities going back as far as 1997, including its rating of reinsurance companies, according to the company. The credit-rating giant said in a 10-Q filed Frid...

By Stephen Taub • Aug. 1, 2005

Keeping an Eye on Third Parties

Self-insuring workers’ compensation risks can be a good move if companies manage the risks well and estimate their liability accurately. Self-insurers can pay less to cover their exposures, and have a powerful incentive to prevent injuries from happening in the first place. But, experts warn, com...

By David Katz • Aug. 1, 2005

Hidden in Plain Sight

The Securities and Exchange Commission doesn’t like lease accounting, and it’s not going to take it any more. In a June report on off-balance-sheet activity commissioned by Congress as part of the Sarbanes-Oxley Act of 2002, SEC staff argued that lease-accounting standards should be rewritten, es...

By Tim Reason • Aug. 1, 2005

Senate Panel OKs Fannie, Freddie Bill

The Senate Banking Committee approved a bill to tighten regulatory controls of Fannie Mae and Freddie Mac that is expected to be voted on by the entire chamber as early as September, according to Dow Jones Newswires.While it’s favored by the Bush Administration, the bill reportedly contains eleme...

By Craig Schneider • July 29, 2005

Senate Banking Committee Endorses Cox

The Senate Banking Committee voted unanimously Thursday to recommend Senate confirmation of Republican nominee Christopher Cox as the head of the Securities and Exchange Commission, according to Dow Jones Newswires.The committee also reportedly voted to endorse nominees SEC commissioner Roel Camp...

By Craig Schneider • July 28, 2005

CFO Sullivan Praised for Ebbers Takedown

Former WorldCom CFO Scott Sullivan is likely to get considerably less jail time than the maximum 25 years because prosecutors credit him with the conviction of WorldCom founder Bernard Ebbers, The Wall Street Journal reported.Sullivan, who pleaded guilty to fraud, conspiracy, and making false fin...

By Craig Schneider • July 28, 2005

Your Escheating Heart

Earlier this year, executives at Old Republic Title Company had reason to realize the importance of passing unclaimed property on to its rightful owners. Years ago, an Old Republic agency subsidiary had failed to let $9.5 million of unclaimed escrow funds revert to California, as required under s...

By Helen Shaw • July 28, 2005

Ex-CFO of WorldCom to Forfeit Estate

Scott Sullivan, the former chief financial officer of WorldCom Inc., has agreed to forfeit his Boca Raton estate and his retirement fund to settle a class-action lawsuit for his role in the company’s $11 billion accounting fraud, according to press reports.Rather than try to claim an exemption un...

By Craig Schneider • July 27, 2005

DaimlerChrysler Hotline in Hot Water

The Securities and Exchange Commission is investigating allegations made by the former administrator of DaimlerChrysler AG’s confidential employee hotline, according to The Wall Street Journal. Christine Holtzman reportedly claimed in her suit in U.S. District Court that she was wrongfully fired ...

By Craig Schneider • July 27, 2005

Cox Pledges Support for Options Rule

Rep. Christopher Cox, nominated for the chairmanship of the Securities and Exchange Commission, reportedly issued strong support on Tuesday for a new accounting rule requiring companies to treat options as an expense, despite his co-sponsorship of a bill last year that tried to limit the practice...

By Craig Schneider • July 26, 2005

Wells Notices for RenaissanceRe Execs

RenaissanceRe Holdings announced that two executives have received a Wells notice from the Securities and Exchange Commission, indicating that the regulator could bring a civil enforcement action against them for possible securities laws violations.The notices were issued to chairman and chief ex...

By Craig Schneider • July 25, 2005

Campos, Nazareth Nominated to SEC Posts

President Bush has formally nominated Roel C. Campos to serve an additional term as a member of the Securities and Exchange Commission and Annette L. Nazareth to fill one of the vacant posts, according to an announcement from the White House.Campos’ term will expire on June 5, 2010.Nazareth, curr...

By Stephen Taub • July 22, 2005

Former Netopia CFO Receives Wells Notice

A former chief financial officer and a former senior sales vice president of sales for Netopia Inc. have each received a Wells notice from the Securities and Exchange Commission, indicating that the regulator could bring a civil enforcement action against them for possible securities laws violati...

By Stephen Taub • July 22, 2005

No Convictions for Enron Broadband Execs

Five former executives of Enron Broadband Services can take a deep breath.Three of the individuals who worked at the unit of Enron Corp. have been acquitted by a federal jury on several charges, according to published reports. The jury deadlocked on the remaining counts, as well as on all charges...

By Dave Cook and Stephen Taub • July 21, 2005

How Markets Punish Material Weaknesses

Section 404 of the Sarbanes-Oxley Act requires companies to disclose internal-control deficiencies in their annual reports. The effects on share prices are examined in “Control Deficiencies: Finding Financial Impurities,” a new analysis of 2004 and early 2005 disclosures by shareholder-advisory f...

By Marie Leone • July 21, 2005

Berkowitz to Head Enron Task Force

The Enron Task Force has named Sean Berkowitz as its third director since its formation in January 2002.Berkowitz, who signed on with Department of Justice team in December 2003, replaces Andrew Weissmann, who joined the task force at its inception as assistant director to Leslie Caldwell. Weissm...

By Stephen Taub • July 19, 2005

Insurance Probes Now Too Independent?

New York Attorney General Eliot Spitzer and federal officials are no longer cooperating and are now pursuing their own, separate investigations of the insurance industry, reported the Washington Post.As recently as late May, the two prosecution teams had been conducting joint interviews, accordin...

By Stephen Taub • July 19, 2005