Prison Time for Former CFO of NTG

The former chief financial officer of a defunct Baltimore-based telecommunications company was sentenced to a year in prison for his role in an accounting fraud that helped destroy the company, according to the Baltimore Sun.In February 2003, Thomas Bray pleaded guilty to wire fraud stemming from...

By Stephen Taub • May 27, 2004

Ebbers Faces Six New Charges

Lying to securities regulators was one of six charges U.S. prosecutors have added to the case against former WorldCom Inc. Chief Executive Officer Bernard Ebbers.Ebbers had already pleaded not guilty in March to the prosecution’s charges of fraud, conspiracy, and making false statements in allega...

By Stephen Taub • May 26, 2004

SEC Fines Approaching 2003 Levels

The Securities and Exchange Commission is continuing to levy fines against corporate wrongdoers at the stiff pace it assumed in 2003. So far this year, the regulatory agency has assessed more than $500 million in fines, according to a Reuters analysis.Last year, the SEC settled cases for a record...

By Stephen Taub • May 26, 2004

Internal Auditors Find Control Gaps

Section 404 may be one of the smaller sections of the Sarbanes-Oxley act (168 words, to be exact), but it’s creating a mountain of work for finance managers.In fact, according to a newly released survey, 182 out of 200 internal auditors said their employers have identified gaps in their internal ...

By Stephen Taub • May 26, 2004

Four Companies Face Resolutions on Chairman, CEO Roles

Are investors better served if a company has separate people serving as its chairman and chief executive officer?That debate will play out this week when shareholders show up at the annual meetings of four companies facing shareholder proposals to split the two top slots, Institutional Shareholde...

By Stephen Taub • May 24, 2004

Two Former Finance Execs Charged with Fraud

The Department of Justice has brought fraud and other related charges against two former finance executives and another former executive of Enterasys Network Systems Inc., a computer hardware and software corporation.The 15-count indictment was brought against Robert Gagalis, former executive vic...

By Stephen Taub • May 24, 2004

Safeway Directors Safely Through

So much for the shareholder revolt at Safeway Inc.Despite high-profile recommendations to withhold votes for key directors facing re-election, shareholders withheld just 16.7 percent of the votes for chairman and chief executive officer Steven Burd at Thursday’s annual meeting, according to the A...

By Stephen Taub • May 21, 2004

Sarbox Costs ”Unpredictable,” Still Rising

The cost increases associated with Sarbanes-Oxley compliance were not a one-time event, according to a study from Foley & Lardner. In fact, added the law firm, as a result of new governance and disclosure reforms, 21 percent of the public companies it surveyed are considering going private.Co...

By Stephen Taub • May 20, 2004

Calpers Mulls Fewer No-Confidence Votes

The California Public Employees’ Retirement System (Calpers) is rethinking a policy that has led the nation’s largest pension fund to withhold votes from director nominees at 90 percent of its portfolio companies.Sean Harrigan, the president of the board of the $166 billion fund, said Monday that...

By Stephen Taub • May 19, 2004

Preventing Business Identity Theft

The message looks official, absolutely genuine. It’s purportedly from a familiar company — it could even be your company — warning the reader that his or her account has been suspended for security purposes and asking them to visit a “secure” Web site to provide credit card and other personal and...

By John Edwards • May 19, 2004

Shakeups on Comcast, Best Buy Boards

As pension funds and shareholder activists flex their governance muscles, a growing number of companies are apparently becoming more responsive to the concerns being raised.Comcast president and chief executive officer Brian Roberts has announced that he plans to resign from the cable giant’s gov...

By Stephen Taub • May 18, 2004

Plea Deal Sets Stage for Cendant Testimony

A former top finance executive of CUC International Inc. has settled civil charges with the Securities and Exchange Commission for his role in the financial fraud committed at the predecessor company of Cendant Corp.Cosmo Corigliano was controller of CUC from 1983 to 1995 and chief financial offi...

By Stephen Taub • May 18, 2004

Appeals Panel ”Guts” Section of Sarbox

A federal appeals court has ruled that two former top executives of Gemstar-TV Guide International Inc., may seek to collect $37.6 million in severance payments that had been blocked by the Securities and Exchange Commission, according to Reuters.The deciding issue for the court seemed to be the ...

By Stephen Taub • May 17, 2004

Former Rite Aid CEO Gets Up to 10 Years

Martin Grass, the former chief executive officer of Rite Aid Corp., agreed to a plea deal with prosecutors that will land him in prison for up to 10 years, according to Reuters. Grass must also pay $500,000 in fines.Grass pleaded guilty to conspiracy to defraud and conspiracy to obstruct justice ...

By Stephen Taub • May 14, 2004

Companies Must Issue Pension Warnings

The Pension Benefit Guaranty Corp. is getting tough on companies that don’t communicate to their rank and file that their pension plans are underfunded. The PBGC proposed an expanded enforcement program, including a new penalty structure, for administrators of underfunded pension plans who fail t...

By Stephen Taub • May 13, 2004

3M Hangs Tough in Poison-Pill Battle

Score one for management in one of the hot governance battlegrounds of the current proxy season: poison pills.A poison pill — a defense against hostile takeovers devised by the attorney Martin Lipton some 20 years ago — is designed to discourage an acquisition by making it more costly, usually th...

By Stephen Taub • May 13, 2004

Enron Employees to Share $68 Million

Current and former employees of Enron Corp. and their retirement plan will share $68 million from a partial settlement in a class action lawsuit, according to the Houston Chronicle.The money will be added to the retirement plans of 12,000 to 20,000 current and former Enron employees, added the pa...

By Stephen Taub • May 13, 2004

Sarbanes-Oxley and Health Plans

Among the many compliance perils created by the Sarbanes-Oxley Act of 2002, one of the least talked about could well be the act’s effect on corporate health-benefit programs.The lack of discussion is understandable. To be sure, benefit managers commonly operate under the wing of human resources e...

By David Katz • May 13, 2004

SEC Settles with Warnaco, Former CFO

The Securities and Exchange Commission settled charges it made against The Warnaco Group for securities fraud and against the company’s former chief financial officer, William Finkelstein, for aiding the fraud. The charges stemmed from misleading disclosures concerning the clothing company’s 1998...

By Stephen Taub • May 12, 2004

Judge Tells Skilling to Dry Out

A federal judge has ordered former Enron Corp. chief executive officer Jeff Skilling to stop drinking alcohol and to undergo alcohol dependency treatment, according to Reuters.U.S. Magistrate Judge Frances Stacy also put Skilling on a curfew and ordered him either to find a full-time job or to pe...

By Stephen Taub • May 11, 2004

Has Calpers Fallen Out of Touch?

The California Public Employees’ Retirement System, or Calpers — a $165 billion pension fund that represents California state workers — has undertaken an ambitious campaign to challenge corporate board nominees.Too ambitious, and too scattershot, say many observers. In prior years Calpers general...

By Dave Cook • May 10, 2004

Fewer Government Bailouts for GSEs?

William Poole, the president of the St. Louis Federal Reserve, has called for the elimination of government lines of credit to Fannie Mae and Freddie Mac, according to Reuters.Poole hopes to reduce the risks faced by the U.S. financial system should either mortgage company run into trouble, the w...

By Stephen Taub • May 10, 2004

Euro Clash

The GMO Monster Tomato Tour kicked off last November in Brussels, outside the European Council building. During the following month, members of the environmental group Friends of the Earth Europe rolled the giant inflatable fruit around the continent, with stops in Paris, Madrid, and Budapest, am...

By Tim Reason • May 10, 2004

Lea Fastow Gets One Year in Prison

Lea Fastow, wife of former Enron Corp. chief financial officer Andrew Fastow, was sentenced to one year in prison and one year of supervision after her release, according to the Houston Chronicle.In a federal courthouse in Houston, the former Enron assistant treasurer pleaded guilty to one misdem...

By Stephen Taub • May 7, 2004

Boeing Must Hire Ethics Watchdog

Boeing, which is being investigated for alleged conflicts of interest in doling out a major defense contract, has hired an independent ethics watchdog at the insistence of the U.S. Air Force, according to the Wall Street Journal.The Air Force demanded that Boeing hire a special compliance officer...

By Stephen Taub • May 6, 2004