Looking for Gaps

When last we looked at the Overtime Guarantee Act known as Sarbanes-Oxley (see “Sarboxing,” February 2004), finance managers were busy tapping out distress signals from Documentation Hill. At the time, the compliance deadline for Section 404 of the act was fast approaching. While Section 302 had ...

By John Goff • Feb. 1, 2005

Trial Watch: Tyco, WorldCom, HealthSouth, Parmalat

It’s hard to keep track of all the former top executives on trial this week without a court docket. Last week, high-profile trials stemming from the spectacular collapses of Tyco International, WorldCom, HealthSouth, and Parmalat got under way.In the retrial of former Tyco chief executive officer...

By Stephen Taub • Jan. 31, 2005

How to Beat the SEC

For many defendants in cases brought by the Securities and Exchange Commission, settling the claim normally seems like the more alluring alternative to going to court against SEC lawyers.Other defendants, however, might be starting to see the courtroom as a safer haven. With lifetime bans on serv...

By Craig Schneider • Jan. 31, 2005

Multinationals Take Anti-Bribery Pledge

Some large multinational companies are adopting a policy of “just say no” to the temptation to pay bribes to further their business purposes.Forty-seven companies, in fact, have signed a “zero tolerance” pact against paying bribes being sponsored by a number of groups working with the World Econo...

By Stephen Taub • Jan. 28, 2005

Class Actions May Head to Federal Courts

A bill that would further standardize class-action lawsuits could reach the Senate floor within two weeks, according to the Wall Street Journal. The ultimate goal of the proposal, says the paper, is to shift these suits from state to federal courts, which is considered better for business by som...

By Stephen Taub • Jan. 27, 2005

SEC Eyes 404 Break for Foreign Issuers

Securities and Exchange Commission (SEC) Chairman William Donaldson would like to give foreign companies more time to comply with the Sarbanes-Oxley Act’s Section 404, the Financial Times reported.In a speech he gave yesterday at the London School of Economics, Donaldson noted that he had asked t...

By Marie Leone • Jan. 26, 2005

Siebel Embraces Pay for Performance

Siebel Systems has taken a giant step toward becoming a leader in tying pay to performance.Under Siebel’s “performance stock plan,” as described in a regulatory filing, individual performance goals will be based on the company’s 2005 revenue, operating margin, and customer satisfaction, or on oth...

By Stephen Taub • Jan. 24, 2005

Certification Fears and Filing Delays

Medical-imaging software company Vital Images Inc., which had planned to announce its financial results on February 17, has postponed the release until March 3.Bear in mind that chief financial officer Gregory S. Furness resigned earlier this month, effective February 8. The company announced at ...

By Stephen Taub • Jan. 24, 2005

Faith-Based Groups Seek Boardroom Power

Say your prayers, CFOs. Faith-based investing groups are back en masse this year to spread their messages to managements and boards.For finance chiefs who want to maintain or build a wide investor base, it’s become increasingly important to monitor the agenda of such groups as the Interfaith Cent...

By Craig Schneider • Jan. 24, 2005

Reg FD Unfair, Says Chamber of Commerce

The U.S. Chamber of Commerce has filed a friend-of-the-court brief in support of Siebel Systems, which is fighting accusations by the Securities and Exchange Commission that it violated Regulation Fair Disclosure, according to The Wall Street Journal.Last June the SEC alleged that Siebel chief fi...

By Stephen Taub • Jan. 21, 2005

Waksals Settle ImClone Charges

Former ImClone Systems Inc. chief executive officer Samuel Waksal and his father, Jack Waksal, have agreed to pay more than $5 million to settle civil charges of illegal insider trading, according to the Securities and Exchange Commission. The two individuals consented to the deal without admitti...

By Stephen Taub • Jan. 20, 2005

Qualcomm Seeks End to Staggered Board

Qualcomm Inc. is changing its governance practicesÂsort of. The San Diego-based telecom equipment maker announced that at its March 8 annual meeting, the company will ask shareholders to “declassify” its board of directors.Should the resolution succeed, all board members will come up for re-elect...

By Stephen Taub • Jan. 20, 2005

Sarbox and IT: The Long Haul

With the last of the requirements of the Sarbanes-Oxley Act finally taking effect, it would have been easy to suspect that corporate America’s drive to comply with corporate governance rules would be nearing completion. Yet finance executives who are leading the compliance charge say they do not ...

By Randy Myers • Jan. 19, 2005

Terex Will Restate after 404 Assessment

We’ll probably see many more such announcements in coming months as companies work toward compliance with Section 404 of the Sarbanes-Oxley Act.Diversified manufacturer Terex Corp. announced that it will restate its financials for 2001 through 2003 to correct certain errors. The company implied i...

By Stephen Taub • Jan. 17, 2005

Nearly 600 Reports of Control Weaknesses

On the eve of the oft-delayed starting date for compliance with Section 404 of Sarbanes-Oxley, it appears as if Corporate America has a lot of work to do to meet the requirements of this daunting rule.Last month alone, 56 companies disclosed material weaknesses or significant deficiencies in inte...

By Stephen Taub • Jan. 17, 2005

Sarbox and the Fight-or-Flight Response

Accepting a position at a once-troubled company in turnaround mode — even a company that had been embroiled in an accounting scandal — used to be an intriguing career move for top managers. Not anymore. With the advent of certification requirements in the Sarbanes-Oxley Act of 2002, joining such ...

By Stephen Taub • Jan. 14, 2005

McKesson Settles Suits for $960 Million

McKesson Corp. announced that it agreed to pay $960 million to settle a class action lawsuit stemming from its 1999 restatement at its subsidiary HBO & Co. Inc.The health services company said it will take a $1.2 billion pre-tax charge ($810 million after tax) to account for the settlement an...

By Stephen Taub • Jan. 14, 2005

Risks and Benefits: D&O’s Moral Peril

Besides providing coverage for board members’ legal risks, a directors’ and officers’ insurance policy can supply them with cover for their laxities.That, at least, seems to have been on shareholders’ minds when they insisted that last week’s settlement with 10 ex-directors of the former WorldCom...

By David Katz • Jan. 13, 2005

Lease Accounting: Food for Thought

Applebee’s International Inc. announced that it may become the latest restaurant company to restate its results due to the way it accounts for certain leases or leasehold improvements.The fast-growing company, which is opening a large number of stores in small cities and towns, acknowledged that ...

By Stephen Taub • Jan. 12, 2005

Supreme Court to Rule on Securities Law

A new case taken up today by the U.S. Supreme Court will determine how stringent to make a standard of pleading and proof for securities fraud class-action lawsuits — and the eventual ruling may have broad ramifications for how well companies can fend off future claims.Broudo v. Dura Pharmaceutic...

By Craig Schneider • Jan. 12, 2005

Taking Charges

Amid the bevy of exotic information technologies that companies hope to leverage — or at least understand — it’s easy to lose sight of a relatively low-tech piece of equipment: the telephone. Until, that is, the bill arrives.Make that bills. Every month at Hewlett-Packard, for example, nearly 2,0...

By Norm Alster • Jan. 12, 2005

Former Enron Directors Will Pay $13M

For the second time in less than a week, former directors from a bankrupt company embroiled in an accounting scandal agreed to pay out of pocket to settle shareholder lawsuits.On Friday, 18 former directors of Enron Corp. announced that they would pay $168 million to settle a lawsuit filed by sha...

By Stephen Taub • Jan. 11, 2005

Federal Agencies, Control Yourselves

The Office of Management and Budget has released new rules designed to strengthen the internal control requirements over financial reporting by federal agencies.“Internal control should be an integral part of the entire cycle of planning, budgeting, management, accounting and auditing,” wrote the...

By Stephen Taub • Jan. 11, 2005

Former WorldCom Directors Pony Up $18 Million

In an agreement that will surely send shivers through the spines of thousands of corporate board members, 10 former outside directors of WorldCom (now MCI Inc.) agreed to pay $54 million to settle part of a class-action lawsuit brought by investors burned by the telecom giant’s accounting scandal...

By Stephen Taub • Jan. 7, 2005

Deferring Prosecution of Corporate Crime

A growing number of companies settling charges of accounting fraud have agreed to a form of corporate probation that enables them to avoid criminal prosecution in exchange for good behavior, according to Bloomberg.Companies that have agreed to “deferred prosecution” provisions, reported the wire ...

By Stephen Taub • Jan. 5, 2005