SEC Sues Former Controller

The Securities and Exchange Commission has charged Barry Richard Kusatzky, the former controller of California Amplifier Inc., with accounting fraud and insider trading.The SEC alleged that from November 27, 1999, through November 25, 2000, Kusatzky caused the Camarillo, California-based maker of...

By Stephen Taub • May 5, 2004

Small-town Blues

Does locating the headquarters of a large company in a small town increase the likelihood of fraud? Richard Breeden, the court-appointed watchdog of WorldCom-cum-MCI, thinks so. The former chairman of the Securities and Exchange Commission says that WorldCom’s headquarters location in Clinton, Mi...

By Ilan Mochari • May 5, 2004

In Case of Emergency

By almost any yardstick, Prairie State Bank is not what you’d call a major financial institution. With a handful of branches scattered in south-central Kansas, the bank maintains a small retail business in the GWMA (Greater Wichita Metropolitan Area). How small is small? On its corporate Website,...

By John Goff • May 5, 2004

SEC May Charge PepsiCo

PepsiCo Inc. announced that the Securities and Exchange Commission may bring civil charges against its Pepsi-Cola and Frito-Lay divisions stemming from a probe into possible revenue-recognition abuses at Kmart Corp.According to PepsiCo, the SEC alleges that in early 2001, a non-executive employee...

By Stephen Taub • May 4, 2004

Quattrone Guilty on All Counts

Former Credit Suisse First Boston investment banker Frank Quattrone was found guilty late yesterday afternoon of all charges in his retrial, according to published reports. Quattrone had been accused of interfering with federal investigations into hot initial public offerings of stock during the ...

By Stephen Taub • May 4, 2004

Reexamining Business-Emergency Planning

Companies spent just 3.2 percent of their IT budgets on security (employee education, business continuity, and disaster recovery) in 2001, according to Stamford, Connecticut-based research firm Meta Group Inc. Last year, the outlay was more like 8.2 percent.“Some CFOs perceive disaster recovery a...

By John Goff • May 4, 2004

Revised Charge for Lea Fastow

It looks as if Lea Fastow, wife of former Enron Corp. chief financial officer Andrew Fastow, may not spend more than a year in jail after all.The former Enron assistant treasurer is scheduled to plead guilty to a misdemeanor tax count at a new arraignment on Thursday, thus avoiding a June trial, ...

By Stephen Taub • May 3, 2004

Most Insurers Can Treat WTC as One Event

In a landmark decision that could have a widespread effect on insurance companies and the insured, a jury ruled that the two airplane strikes that brought down the World Trade Center on September 11, 2001, amounted to one incident, from an insurance standpoint.The upshot: There will be $1 billion...

By Stephen Taub • May 3, 2004

Full Steam Ahead?

Diplomatic and trade relations between Europe and the US may be somewhat frosty these days, but there’s one area where transatlantic bonhomie is at an all-time high: securities regulation. In January William Donaldson, chairman of the US Securities and Exchange Commission (SEC), paid a visit to B...

By Ben McLannahan • May 3, 2004

Pitt Lambastes SEC Board-Nomination Plan

Harvey Pitt, the former chairman Securities and Exchange Commission, has criticized the SEC’s plans to give some investors a greater voice in nominating candidates to companies’ boards of directors.In a speech several days ago at a conference hosted by Compliance Week, Pitt — a columnist for the ...

By Stephen Taub • April 30, 2004

BP Chief Pans Accounting Rules

In words that would suggest the need for international accounting standards, Lord Browne of Madingley, the chief executive officer of BP Plc., criticized the Securities and Exchange Commission for applying its recently instituted guidelines on oil-reserve reporting only to the Gulf of Mexico, acc...

By Stephen Taub • April 29, 2004

Calpers Nixes Nominees at 11 Companies

Calpers, the nation’s biggest pension fund, announced on Monday that it will withhold proxy votes for board-of-director nominees at 11 companies, including Verizon, Merck, Adobe, and Alcoa.In most cases, such as Adobe, Merck, and Verizon, Calpers is opposing nominees who sit on audit committees t...

By Stephen Taub • April 27, 2004

Who’s in Charge of Sarbox Compliance?

Who’s minding the store when it comes to corporate compliance with the Sarbanes-Oxley Act?The answer apparently depends on the size of the company, according to a new survey from Parson Consulting. While 25 percent of larger companies favor a single Sarbox compliance officer, another 25 percent b...

By Stephen Taub • April 27, 2004

Calpers Chokes on Apple

During the current proxy season, Calpers may be making a fuss about withholding director votes. But so far, the campaign by the nation’s largest pension fund’s has amounted to little more than background noise.Last week, many shareholders voted against Calpers’ wishes at the annual meetings of at...

By Stephen Taub • April 26, 2004

Spitzer Subpoenas Biggest Insurance Brokerages

Following his investigation of conflicts of interest on Wall Street, New York State Attorney General Eliot Spitzer’s seems to zeroing in on the insurance industry.Late last week, Marsh & McLennan, Aon Corp., and Willis Group Holdings, the three largest insurance brokers, all reported that the...

By Stephen Taub • April 26, 2004

Irate Shareholders Roil Utility’s Annual Meeting

This is clearly not your father’s annual-meeting season. Last week, a day after a fight broke out at Coca-Cola’s shareholder gathering, more than 200 attendees to PG&E Corp.’s annual meeting staged a raucous protest against the utility’s compensation practices.It seems they were not very happ...

By Stephen Taub • April 26, 2004

Cendant Ends Staggered Board

Cendant Corp. is yet another company that is changing its policies to accommodate the sentiments of its shareholders.The New York-based travel and real estate company announced that shareholders approved a company proposal to declassify its board of directors, which means that the entire board wi...

By Stephen Taub • April 23, 2004

Skilling: Go Directly to Jail?

Is Jeffrey Skilling headed for the slammer, sooner rather than later?This is the latest question facing the former Enron Corp. chief executive officer, who has been charged with nearly three dozen counts of fraud, conspiracy, and insider trading related to the collapse of the energy giant. But th...

By Stephen Taub • April 23, 2004

Rite Aid Plea Agreement Thrown Out

About two weeks after a judge threw out the plea bargain for former Enron treasurer Lea Fastow, another high-profile corporate case has seen a plea deal set aside.Yesterday a federal judge rejected a plea agreement by prosecutors with Martin Grass, the former chief executive of Rite Aid Corp., sa...

By Stephen Taub • April 22, 2004

Scuffle at Coca-Cola Annual Meeting

Shareholder activism has apparently become a contact sport.A shareholder who accused Coca-Cola Co. of violating human rights in Colombia was shoved to the ground and forcibly removed from the company’s annual meeting on Wednesday, according to Reuters.Ray Rogers, reported the wire service, had be...

By Stephen Taub • April 22, 2004

The Great Inflatable Service Bill

In December, PricewaterhouseCoopers LLP settled charges that it had overbilled clients by hundreds of millions of dollars by not passing on rebates received from travel agencies (class-action suits against KPMG and Ernst & Young are still pending). The new year brought the indictment of execu...

By Don Durfee • April 22, 2004

Computer Associates Fires Nine Employees

Computer Associates International Inc. is close to putting the finishing touches on a resolution to its accounting scandal.On Monday, the software giant announced that it had sacked five individuals in its finance department and four in its legal department. The firings, added the company, result...

By Stephen Taub • April 20, 2004

Repay That Loan Again, Scrushy Is Told

Former HealthSouth Corp. chief executive officer Richard Scrushy will be $25 million lighter when he defends charges that he led the company’s $2.7 billion fraud.The Delaware Supreme Court affirmed a lower-court ruling that the company’s founder must repay a $25 million loan to the company, accor...

By Stephen Taub • April 19, 2004

Qwest Prosecutors End Up Empty-Handed

In a federal court in Denver, the prosecution in the Qwest trial packed up for the weekend, empty-handed, with very little to show for a two-year investigation.Four former executives of Qwest Communications International Inc. — Grant Graham, former chief financial officer for Qwest’s global busin...

By Dave Cook • April 19, 2004

Filing Ever Faster

There is a paradox at the heart of the Sarbanes-Oxley Act of 2002. On one hand, the law requires companies to provide more-detailed and more-accurate financial statements. On the other, it cuts the time to do so. As recently as last year, companies had 90 days to file 10-Ks and 45 days for 10-Qs....

By Don Durfee • April 19, 2004