An Industry Mired in Scandal

First came investment banking; then mutual funds; now the insurance industry is mired in scandal, the latest target of Eliot Spitzer, New York’s formidable attorney general. On October 14th he filed civil charges against Marsh & McLennan, the world’s biggest insurance broker, and announced se...

By Economist Staff • Oct. 22, 2004

Two Trials for Kenneth Lay

Former Enron Corp. chairman Kenneth Lay will face not one criminal trial, but two.Lay, former Enron chief executive officer Jeffrey Skilling, and former chief accountant Rick Causey had requested separate trials in federal court in Houston. U.S. District Judge Sim Lake did rule that the four crim...

By Stephen Taub • Oct. 21, 2004

Are Health Insurers Next for Spitzer?

New York State Attorney General Eliot Spitzer now has the cross-hairs trained on the health insurance industry, according to The New York Post.The newspaper reported that Spitzer — who late last week socked major brokers and insurers of commercial lines when he accused Marsh & McLennan of sol...

By Stephen Taub • Oct. 20, 2004

Bumper Crop of Corporate Probes

Stephen Taub’s opinion column appears on Wednesday. Contact him at [email protected] Mae, Krispy Kreme, Marsh & McLennan, American International Group. This year’s “fall harvest” — another bounty of companies under investigation by the Securities and Exchange Commission, the Depar...

By Stephen Taub • Oct. 20, 2004

Marsh Suspends Use of MSAs

Marsh & McLennan Cos. Inc. announced on Friday that its risk and insurance services subsidiary will immediately suspend its practice of market services agreements (MSAs) with insurance carriers, in light of the allegations and questions raised by New York State Attorney General Eliot Spitzer,...

By Stephen Taub • Oct. 18, 2004

Rite Aid Exec, 76, Gets 10 Years in Prison

Franklin Brown, former vice chairman and chief counsel of Rite Aid Corp., was sentenced last week to 10 years in federal prison for his role in the massive accounting fraud at the company. He was convicted in a jury trial last October of crimes including making false statements to the Securities ...

By Stephen Taub • Oct. 18, 2004

Flu-Shot Maker Faces Federal Probes

Chiron Corp., which recently suspended production of its Fluvirin flu vaccine, is being investigated by at least three federal agencies.Officials at the Emeryville, Calif.-based company said in a regulatory filing that the Securities and Exchange Commission has launched an informal inquiry to det...

By Stephen Taub • Oct. 15, 2004

Risks and Benefits: The CFO as CRO?

At first glance, chief financial officers seem splendidly positioned to be the czars of enterprise risk management.Indeed, many already oversee one traditional area of risk management: the operational hazards often covered by property-casualty insurance. Typically, the corporate risk manager — wh...

By David Katz • Oct. 14, 2004

A Few Good Suppliers

Cut costs by trimming the number of your suppliers. Heard it before? It’s the business equivalent of “diet and exercise.” But paring down to just a few suppliers can be too much of a good thing. The Hackett Group, an Atlanta-based business-advisory firm, says that many leading companies are actua...

By Ilan Mochari • Oct. 14, 2004

Pension Funds Angle for ”Proxy Access”

Yesterday, four of the country’s largest pension funds threatened to shake up the proxy process.The California Public Employees’ Retirement System (Calpers), the New York State Common Retirement Fund, the AFSCME Employees Pension Plan, and the Illinois State Board of Investment announced a joint ...

By Stephen Taub • Oct. 13, 2004

Investor Group Names 25 Underperformers

The Council of Institutional Investors (CII), an organization of large public labor funds and corporate pension funds, released its 14th annual “focus list” of 25 underperforming companies.According to the council, companies included on the list had total stock returns that lagged their broad mar...

By Stephen Taub • Oct. 12, 2004

Guilty Plea for Another Ex-Enron Exec

Timothy Despain, a former assistant treasurer for Enron Corp., pleaded guilty on Tuesday in U.S. District Court in Houston to conspiracy to commit securities fraud. He admitted that from 1999 through the fall of 2001, he and his superiors falsely represented to credit-rating agencies that Enron’s...

By Stephen Taub • Oct. 7, 2004

Another Enron CFO Departs

Houston-based energy company Enron Corp. announced in a government filing Friday that Raymond M. Bowen resigned as executive vice president, chief financial officer, and treasurer, effective immediately.Bowen, who joined Enron in 1996, became treasurer in November 2001, shortly before the company...

By Stephen Taub • Oct. 5, 2004

For AIG, Bad Press Begets Bad Press

More troubles for American International Group.The insurance giant is already being investigated by the Department of Justice and the Securities and Exchange Commission for transactions marketed to PNC Financial Services Group Inc. Now AIG has announced that the commission will probably bring a s...

By Stephen Taub • Oct. 5, 2004

SEC Probes Delphi-EDS Deals

The Securities and Exchange Commission has launched an investigation into Dephi Corp.’s dealings with Electronic Data Systems Corp. and another information-technology provider.The investigation marks a somewhat unusual turn of events. Although there have been scores of SEC investigations of accou...

By Stephen Taub • Oct. 1, 2004

Justice Investigating Fannie Mae: Report

The problems are piling up at Fannie Mae. On the heels of a federal regulator’s report detailing earnings manipulation and other accounting problems, the Justice Department has launched a probe into possible accounting fraud at the giant mortgage company, according to The Wall Street Journal.The ...

By Stephen Taub • Oct. 1, 2004

SEC Charges Ex-CFO with Insider Trading

The Securities and Exchange Commission has filed insider-trading charges against Mark Kelly, the former finance chief of Auto One Finance, a subsidiary of Golden State Bancorp. The SEC also leveled the same charge at three other individuals. The commission asserted that Kelly was asked to help wi...

By Stephen Taub • Sept. 30, 2004

Fannie Mae Restatement May Be on Tap

Fannie Mae seemed to put many of its problems behind it on Monday, when the company agreed to sweeping changes generated by a federal regulatory agency’s critical assessment of Fannie’s accounting policies.Nevertheless, it became clear on Tuesday that the nation’s largest buyer of mortgages hadn’...

By Stephen Taub • Sept. 29, 2004

Lehman Nears Settlement of Enron Suit

Lehman Brothers Holdings Inc. is close to an agreement to pay $222.5 million to settle a class-action lawsuit filed by Enron Corp. shareholders, according to published reports.The lawsuit singled out Lehman’s involvement in the underwriting of at least three Enron debt issues, beginning in 1998, ...

By Stephen Taub • Sept. 27, 2004

Regulator Singles Out Fannie Mae CFO

The Federal agency that oversees the nation’s largest mortgage companies cited Fannie Mae’s vice chairman and finance chief, J. Timothy Howard, for failures in overseeing the organization’s controller’s office and its audit functions. The Office of Federal Housing Enterprise Oversight (OFHEO) sai...

By Stephen Taub • Sept. 24, 2004

SEC Probing Fannie Mae

The Securities and Exchange Commission is investigating accounting issues at Fannie Mae that had been cited by the mortgage company’s federal regulator, according to the presiding director of Fannie Mae’s Board.Fannie Mae’s regulator, the Office of Federal Housing Enterprise Oversight (OFHEO) has...

By Stephen Taub • Sept. 23, 2004

CA Settles Charges for $225 Million

Computer Associates International, Inc. said yesterday that it would pay $225 million to settle investigations by the Department of Justice and the Securities and Exchange Commission. The software company had been charged with inflating company revenues by $2.2 billion.Further, former CA chief ex...

By Stephen Taub • Sept. 23, 2004

SEC Mulls New Charges against AIG

The Securities and Exchange Commission’s staff is thinking about suing American International Group, Inc. for alleged violations of securities laws in connection to deals marketed to PNC Financial Services Group by a unit of the insurer.AIG announced earlier this week that the insurance giant and...

By Stephen Taub • Sept. 23, 2004

Gaps Found in Fannie Mae’s GAAP: Reports

The federal agency that oversees Fannie Mae presented the results of its eight-month investigation to the board of directors of the mortgage giant, detailing earnings manipulation and other accounting problems it has uncovered, according to published reports. So far, neither The Office of Federal...

By Stephen Taub • Sept. 22, 2004

MCI Creditors Facing SEC Probe

A Securities and Exchange Commission probe is focusing on whether members of MCI’s creditors committee committed insider-trading violations when the company, the former WorldCom, Inc., was in Chapter 11, The Wall Street Journal reported.Although the commission’s investigation is currently in a pr...

By Stephen Taub • Sept. 21, 2004