Swartz Will Testify, but Not Kozlowski

Former Tyco chief financial officer Mark Swartz is expected to testify today at the trial involving him and his former boss, ex-chairman L. Dennis Kozlowski.The trial was postponed Monday because Kozlowski injured his ankle and foot on Friday in a fall.Charles Stillman, the top defense lawyer for...

By Stephen Taub • Feb. 10, 2004

SEC Probing Flowserve Restatements

Flowserve Corp., a provider of industrial flow-management services, said the SEC has launched an informal inquiry related to its February 3 announcement to restate its financial statements dating back to 2000.Last week the company announced that during the latter part of the fourth quarter, it be...

By Stephen Taub • Feb. 10, 2004

Enron ”On the Hook” for Pension Losses

Failed energy giant Enron Corp. agreed to put the proceeds of its $2.3 billion sale of Portland General Electric into an interest-bearing account to cover its share of pension losses, according to a report in the Portland (Oregon) Tribune.The agreement came last Wednesday in U.S. Bankruptcy Court...

By Lisa Yoon • Feb. 10, 2004

Parmalat, Park Avenue, and Flighty Files

A huge number of Parmalat-related documents were removed from the offices of the food and milk giant’s New York City law firm several weeks before the Italian company was raided, according to an account posted on the Web site of the Financial Times.The paper — citing several employees, most of wh...

By Stephen Taub • Feb. 9, 2004

General Mills, Executives Receive Wells Notice

General Mills Inc. announced that it has received a Wells notice from the Securities and Exchange Commission in connection with the SEC’s probe, first made public in October, into the company’s sales practices and related accounting.The notice also covers chief executive officer Steve Sanger and ...

By Stephen Taub • Feb. 5, 2004

Premiums Soar for Directors

The rash of corporate scandals and recently established legal exposure for directors under Sarbanes-Oxley have driven up the price of liability insurance for boardroom officials.Last year, premiums for directors’ and officers’ (D&O) liability insurance rose an average 33 percent, on top of a ...

By Stephen Taub • Feb. 4, 2004

Sarboxing

When last we left Mark Thompson (“Drowning in Data,” November 2003), the senior vice president of finance and information technology at Crown Media Holdings was shopping for software. Specifically, he was looking for an application that would help him manage the company’s international contract r...

By John Goff • Feb. 3, 2004

Cheese It, the States!

Which should you fear more: a Formal Order of Investigation subpoena from the Securities and Exchange Commission, or a Martin Act subpoena from New York Attorney General Eliot Spitzer? Either would send shivers down the spine of any finance executive, but lately it’s the state subpoenas that have...

By Tim Reason • Feb. 2, 2004

Regulator Getting Tough with Freddie Mac

The government agency that oversees Freddie Mac ordered the number-two mortgage-finance company to increase its minimum capital requirement by 30 percent due to the higher operational risk arising from the company’s recent accounting scandal.The Office of Federal Housing Enterprise Oversight (OFH...

By Stephen Taub • Jan. 30, 2004

Judgments Against Former Safety-Kleen Execs

The former chief financial officer and the former chief executive officer of hazardous-waste disposal company Safety-Kleen Corp. will pay fines as part of a final judgment against the pair for their role in an accounting scandal.The complaint by the Securities and Exchange Commission, filed in De...

By Stephen Taub • Jan. 30, 2004

Less Talk, More Action

John Tiner has been dubbed “Europe’s most influential regulator.” As the new chief executive of the UK’s Financial Services Authority (FSA), he wants to overhaul the way financial markets are overseen, slashing red tape while cracking down on repeat offenders. Promising less talk, more action, ca...

By Ben McLannahan • Jan. 30, 2004

British FSA Cites Deloitte Unit for Compliance Flaws

A unit of Deloitte & Touche was fined $1.4 million on Wednesday by Britain’s financial watchdog for serious compliance failings, according to Reuters.The Financial Services Authority stated that the fine against Deloitte & Touche Wealth Management Ltd. was the largest it has ever levied a...

By Stephen Taub • Jan. 29, 2004

Bargaining for Better D&O Coverage

Not just because it was the day after Christmas does Duke Energy risk manager Jeffery Triplette recall December 26, 2002, as a particularly glowing time.On that day, New York district court judge Jed Rakoff threw out 13 shareholder class-action suits alleging that the Fortune 500 utility was usin...

By David Katz • Jan. 29, 2004

Risk Management

CFOs and thrill-seekers may be the only people whose ears actually perk up at the word risk. Understanding, preparing for, and responding to risk are key elements of the job, and now, thanks largely to current events, technology is being brought to bear in the still rather hazily defined area of ...

By John Verity • Jan. 28, 2004

Causey Celebre

Another Enron senior executive has taken the perp walk.Richard Causey, Enron’s former chief accounting officer, was charged with six counts of securities fraud and conspiracy to commit securities fraud yesterday and pleaded not guilty. He surrendered to the FBI in Houston around dawn, and was tak...

By Stephen Taub • Jan. 23, 2004

Show Us the Cash!

Much ink has been devoted to earnings guidance for equity investors, but what do debt investors want? Earnings per share is a nice-to-have, and some debt investors are happy with information about business trends and the general direction of future earnings. More than any other metric, however, f...

By Kara Newman • Jan. 22, 2004

Fastow’s Plea Is Not the Final Chapter

Indicted on 98 criminal counts, former Enron CFO Andrew Fastow ultimately pleaded guilty to one count of conspiracy to commit wire fraud and one count of conspiracy to commit wire fraud and securities fraud. He will forfeit $29 million in assets (most of which had already been frozen by federal a...

By Tim Reason • Jan. 16, 2004

It’s Official: Fastows Plead Guilty

The Fastows are going to jail.Former Enron Corp. CFO Andrew Fastow pleaded guilty on Wednesday to two counts of conspiracy and agreed to forfeit $29 million in assets, most of which were previously frozen by federal authorities, according to Reuters. He also reportedly agreed to cooperate with pr...

By Stephen Taub • Jan. 15, 2004

Andrew and Lea Fastow Agree to Plead Guilty

Former Enron Corp. chief financial officer Andrew Fastow and his wife, Lea, a former Enron assistant treasurer, will plead guilty on Wednesday, according to the Houston Chronicle.Andrew Fastow is scheduled to plead guilty before U.S. District Judge Kenneth Hoyt; some time afterward, Lea Fastow is...

By Dave Cook and Stephen Taub • Jan. 14, 2004

Fastow-ian Bargain?

(Editor’s note: Andrew and Lea Fastow each pleaded guilty on Wednesday, January 14.)As plea negotiations play out for Andrew and Lea Fastow, financial executives would do well to consider the consequences — and not only for the unhappy couple.From a career perspective, there has never been a grea...

By Marie Leone • Jan. 9, 2004

Judge OKs Guilty Plea by Lea Fastow

A federal judge in Houston will allow former Enron assistant treasurer Lea Fastow to plead guilty to one tax violation. Under the proposed deal, according to Reuters, she would serve a five-month sentence.The pact would seemingly pave the way for prosecutors to work out an agreement with her husb...

By Stephen Taub • Jan. 9, 2004

Andrew and Lea Fastow Seeking Plea Deals

Former Enron chief financial officer Andrew Fastow and his wife, Lea, are negotiating plea bargains that would result in time behind bars for the couple, according to the Houston Chronicle.The deals being discussed call for Andrew Fastow to serve 10 years in prison and Lea Fastow to serve five mo...

By Stephen Taub • Jan. 8, 2004

How Low Is Too Low?

Conventional wisdom holds that institutional investors, particularly mutual funds, automatically unload all holdings of stocks trading below $5 a share. As a result, finance executives may worry that wholesale institutional selling could put further pressure on a teetering share price. If a stock...

By Kara Newman • Dec. 11, 2003

Enron Examiner Cites Auditors, Banks

Enron examiner Harrison Goldin came down hard on two of the Big Four accounting firms and two major investment banks in a new report addressing transactions involving the controversial special-purpose entities at Enron Corp.Accounting firms KPMG LLP and PricewaterhouseCoopers LP, as well as Bank ...

By Stephen Taub • Dec. 8, 2003

Safety First

“Only you can prevent forest fires” was the cautionary message of a long-running risk management campaign. An accounting scandal may seem much less dramatic than a wildfire — but to your company, it could be just as devastating.Roger Friedberger has certainly been keeping a lookout. Since 1996, w...

By David Katz • Dec. 8, 2003