How a CFO Stole from Children’s Hospital

In connection with a scheme that the prosecutor described as “the lowest of the low,” the former chief financial officer of Shriners Hospital for Children in St. Louis pleaded guilty to defrauding the institution of more than $828,000,Robert Steven Brodzin’s plea was to one felony count of mail f...

By Stephen Taub and Roy Harris • Aug. 21, 2008

Brokers Are in Auction-rate Cross-hairs

Some regulators appear to be shifting the focus in their investigations of abuses in the auction-rate securities market, concentrating more on brokerages that sold the securities, and less on the banks that created them.On-site inspections of about 40 brokerages involved in the ARS market will be...

By Stephen Taub • Aug. 21, 2008

Harvey Pitt Returns to Government

Former Securities and Exchange Commission chairman Harvey Pitt has been invited once again to be securities sheriff. This time, his work will be on the state level, and will involve only one investigation. On Tuesday, Pitt was appointed deputy attorney general for the state of Alabama to investi...

By Sarah Johnson • Aug. 20, 2008

“Nobody Gets a Pass” in SEC ARS Probe

The Securities and Exchange Commission’s investigation into auction-rate securities abuses is ranging far beyond the five banks that have already agreed to buy back billions of dollars of ARS from customers, SEC Chairman Christopher Cox told reporters.“We have over a dozen pending investigations ...

By Stephen Taub • Aug. 19, 2008

SEC Halts “Pump and Dump” Scheme

The Securities and Exchange Commission has once again demonstrated that its regulatory tentacles reach well beyond U.S. borders.The regulator has obtained an emergency court order freezing the profits from an alleged $13 million international fraud involving a Seattle-area microcap company and a ...

By Stephen Taub • Aug. 15, 2008

Cuomo Settles JP Morgan, Morgan Stanley ARS Claims

JP Morgan Chase & Co. and Morgan Stanley have collectively agreed to return over $7 billion to investors who purchased auction rate securities under a settlement announced by New York State Attorney General Andrew M. Cuomo. The agreements settle allegations that JP Morgan and Morgan Stanley m...

By Stephen Taub • Aug. 14, 2008

SEC Takes Bite Out of Apple’s Ex-Counsel

The former general counsel of Apple Inc., Nancy R. Heinen, agreed to pay $2.2 million to settle Securities and Exchange Commission stock-option backdating charges.Heinen agreed, without admitting to or denying the allegations, to terms that bar her from serving as an officer or director of any pu...

By Stephen Taub • Aug. 14, 2008

Phantom Menace

Not all short lists are worth being on. The Securities and Exchange Commission (SEC) announced rules on July 15th to restrict short-selling of 19 financial stocks. Many suspected that America’s market regulator wanted to resuscitate the shares of these firms, especially those of Lehman Brothers,...

By Economist Staff • Aug. 14, 2008

Charlotte Russe Tries a Poison Pill

Women’s mall-based specialty retailer Charlotte Russe Holding adopted a stockholder rights plan, saying it isn’t designed to ward off any specific takeover threat.The San Diego-based company did say, however, that “it should deter any attempt to acquire Charlotte Russe in a manner or on terms not...

By Stephen Taub • Aug. 14, 2008

SemGroup Facing Chapter 11 Fraud Probe

The U.S. Justice Department is seeking to investigate claims of fraudulent trading that may have resulted in last month’s financial collapse of SemGroup, a Tulsa, Okla.-based energy trader, Reuters reported. RZB Finance LLC, SemGroup’s lender, said in court documents that the Blackstone Group, ...

By Alan Rappeport • Aug. 13, 2008

Survival in the Age of Risk

Faced with threats from all quarters — recession and credit crunch, heated global competition, continuing Sarbanes-Oxley pressures — companies are making intensive risk management a top priority, and once again CFOs find themselves on the front lines.Many CFOs now must deal not only with managing...

By Marshall Krantz • Aug. 13, 2008

It’s Twilight for Sun Communities Ex-CFO

The former CFO of Sun Communities Inc. took the brunt of Securities and Exchange Commission charges at the end of an accounting-practices investigation that originally had targeted the CEO and controller as well.Without admitting to or denying the findings, Jeffrey P. Jorissen consented to a fina...

By Stephen Taub • Aug. 12, 2008

Did CFO Embezzle $3m to Invest in the Market?

The former finance executive for a nonprofit that operates a museum parking lot in San Francisco’s Golden Gate Park pleaded not guilty to charges that he embezzled more than $3 million from the company.Gregory Colley, who worked for the Music Community Concourse Partnership, which manages undergr...

By Stephen Taub and Roy Harris • Aug. 12, 2008

SEC Looks at Calpine, National City

Two companies, power producer Calpine Corp. and financial services company National City Corp., disclosed in regulatory filings that they are targets of unrelated probes by the Securities and Exchange Commission.Calpine said it had been contacted by the SEC and had had meetings with the SEC staff...

By Stephen Taub • Aug. 11, 2008

Microcaps Charged in Capital-Raising Scam

The Securities and Exchange Commission charged six microcap companies on Thursday for their roles in an alleged scheme that put billions of improperly registered shares into the public markets. Microcap are the smallest public companies in terms of market capitalization that still meet exchange l...

By Kate Plourd • Aug. 7, 2008

Pru Settles “Sham” Finite Insurance Case

Prudential Financial Inc. settled Securities and Exchange Commission civil charges that Prudential improperly reported over $200 million in income as the result of “sham” finite reinsurance contracts. Without admitting or denying the commission’s allegations, Prudential agreed to settle the charg...

By Stephen Taub • Aug. 6, 2008

Ex-CFO Snubbed in Whistle-blower Case

The CFO who became the first person to win protection under Sarbanes-Oxley’s whistle-blower provision suffered yet another setback in his rocky battle to win back his job.A three-judge panel of the 4th Circuit Court of Appeals refused to reinstate David Welch as chief financial officer of Cardina...

By Stephen Taub • Aug. 6, 2008

Ex-Controller Guilty of Credit Card Embezzlement

The former controller of Emmis Communications Corp. pled guilty to embezzling more than $70,000 from the media company — money she allegedly transferred in unauthorized payments to her corporate credit card account.Sylvia York, whose pleas were to wire fraud charges, agreed to pay back the money,...

By Stephen Taub • Aug. 6, 2008

D&O Insurance Rates Dip, after Plunge

Premiums for directors’ and officers’ insurance fell moderately in the second quarter, after dropping sharply the quarter before, according to a new industry survey.The slide in premium has come despite a rise in claims related to the subprime mortgage crisis. The claims, however, remained largel...

By Alan Rappeport • Aug. 5, 2008

U. of Phoenix Case Rises from Loss

Apollo Group Inc., best known for its University of Phoenix subsidiary, said a judge overturned an earlier verdict that had found the company fraudulently misled investors about its student recruitment policies.It had been ordered to pay shareholders about $280 million.Shareholders had claimed th...

By Stephen Taub • Aug. 5, 2008

“Mr. John” Pleads Guilty in Tishman Toilet Scam

A former project accountant at Tishman Construction Corp. pleaded guilty to stealing $2.8 million from the company in a phony invoicing scheme involving portable toilets, for which he sometimes signed checks “Mr. John.”John Hoeffner pleaded guilty to counts of grand larceny in the first degree an...

By Stephen Taub • Aug. 5, 2008

SEC at Full Strength

Expect Securities and Exchange Commission Chairman Christopher Cox to make faster progress in key areas, like the move toward international financial reporting standards, now that the regulator is once again at full strength. Last week, the SEC filled the last of two empty commissioner seats.Offi...

By Sarah Johnson • Aug. 4, 2008

Ex-NBC Finance Exec Pleads Guilty in Embezzlement Case

A former finance executive at NBC Universal has pleaded guilty to charges of scheming to steal over $800,000 from the company. James Walsh, the former treasury manager of NBC Universal, was charged with one count of conspiracy to commit wire fraud and one count of wire fraud, according to Michael...

By Stephen Taub • Aug. 4, 2008

What a CFO Doesn’t Say Can Hurt

That carefully crafted oral presentation you put in play at your last earnings conference call might actually have delivered some messages other than those you intended.Maybe you had some misgivings about the company’s performance outlook that you aimed to keep to yourself. But according to a new...

By David McCann • Aug. 1, 2008

Did Reg FD Really Level the Playing Field?

Hoping to inject some fair play into the system, the Securities and Exchange Commission also may have given investors less to work with, according to a new study. Indeed, researchers found that the SEC’s Regulation Fair Disclosure rule has curtailed the amount of information that companies disclo...

By Kate Plourd • July 31, 2008