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

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

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

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

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

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

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

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