SEC to Delay 404(b) for Small Companies

The Securities and Exchange Commission has voted unanimously to recommend a one-year delay of the date when small companies must comply with the auditor-attestation provision of the Sarbanes-Oxley Act so that it can complete a study on the costs of compliance with Section 404.SEC chairman Christo...

By Stephen Taub • Feb. 1, 2008

Attempting to Answer the $91,000 Question

Ever since companies began to confront Section 404 of the Sarbanes-Oxley Act, the question of how much it actually costs to comply has been hotly debated. While many companies ridiculed the Securities and Exchange Commission’s initial estimate of $91,000 as being far too low, the figure has attai...

By Sarah Johnson • Feb. 1, 2008

No Rest for the Leery

What a difference a year makes. Last year at this time, the newly formed Committee on Capital Markets Regulation (CCMR), which was organized by Harvard Law School professor Hal Scott and blessed by Treasury Secretary Henry Paulson, was garnering plenty of buzz as it pushed for key reforms to fina...

By Alix Stuart • Feb. 1, 2008

Losing Their Grip

Few ways of getting around China are more harrowing than a nighttime taxi ride through the countryside. Invariably, such trips are taken at high speed. With one hand on the steering wheel, the cabbie will accelerate past villages, swerve around ox carts, and honk at each pedestrian and cyclist pa...

By Yang Jian and Don Durfee • Feb. 1, 2008

“Diamonds on Every Finger and Toe”

A former accounting clerk was sentenced to 11 years in prison for stealing more than $1 million from her Illinois employer. The ex-clerk, Jonah Bantug, used the money to bankroll her gambling addiction at Illinois riverboats and during trips to Las Vegas, and other purchases such as flat-screen ...

By Stephen Taub • Jan. 31, 2008

Feeling Confident?

CFOs might be worried about the economy, but when it comes to themselves, they are generally an optimistic bunch.John Maynard Keynes once wrote, “Individual initiative will only be adequate when reasonable calculation is supplemented and supported by animal spirits.” The British economist observe...

By Alan Rappeport • Jan. 31, 2008

Deloitte Analyzes SEC’s Take on IFRS

The Securities and Exchange Commission’s November 2007 decision to drop the requirement for foreign issuers to reconcile financial statements with U.S. GAAP did not happen overnight. One measure the SEC took was to carefully review the IFRS filings of foreign issuers and comment on what was wrong...

By Alan Rappeport • Jan. 31, 2008

Shadow over the Super Bowl: Counterfeiting

Law-enforcement officials confiscated more than $140,000 worth of phony sports-related clothing and memorabilia from a sports memorabilia store in Glendale, Ariz., on the eve of the Super Bowl, which will be played there on Sunday.Agents with U.S. Immigration and Customs Enforcement (ICE) and an...

By Stephen Taub • Jan. 31, 2008

Breaking Up Isn’t So Hard to Do

With an economic downturn looming, more companies are likely to be stuck with excess office space this year. The good news: experts say that conditions are more favorable than ever to break leases with minimal consequences.Normally, landlords charge high premiums for tenants to get out of leases....

By Alix Stuart • Jan. 30, 2008

SEC Cracks Down on “Creative Writing”

The Securities and Exchange Commission announced Tuesday that it took action in two unrelated cases of companies using bogus press releases.In one of the cases, the regulator accused Stinger Systems Inc. and company president Robert Gruder of making a series of material misrepresentations and omi...

By Stephen Taub • Jan. 30, 2008

AIG Settles Broker-Payoff Cases

American International Group has agreed to pay $12.5 million to settle with nine states and the District of Columbia in their investigations into questionable payments by insurance companies to brokers. The investigations have focused on contingent commissions paid to brokers based on bringing bu...

By Stephen Taub • Jan. 29, 2008

Sarbox Stings Small Biz, but How Much?

The California think-tank RAND Corp. spent last year quantifying the impact on small business of Sarbanes-Oxley Section 404. And in the areas of cost, negative stock-price reactions, and the tendency to exit public markets, its research showed that companies with less than $75 million market capi...

By Roy Harris • Jan. 29, 2008

XBRL: The Ugliest Acronym

Critics of the Securities and Exchange Commission’s “interactive data” agenda have been more vocal lately, as the possibility of an XBRL mandate begins to look more like a reality. But rather than shying away, the SEC has embraced critiques of its plan for extensible business-reporting language.T...

By Alan Rappeport • Jan. 28, 2008

CFO Punished for Wire Fraud

A federal court has entered a final judgment against the former CFO of Q Comm International — now called Emida — for committing wire and accounting fraud. The ex-CFO, Michael Openshaw, agreed without admitting or denying the allegations to be barred from serving as an officer or director of a pu...

By Stephen Taub • Jan. 28, 2008

Broadcom “Conspirators” Are Outed

Federal prosecutors have identified Broadcom co-founders Henry T. Nicholas III and Henry Samueli as “unindicted potential co-conspirators” in an investigation into the illegal backdating of stock options, the Associated Press has reported.The disclosure came as a result of a plea deal with Nancy ...

By Stephen Taub • Jan. 25, 2008

Judge Keeps Enron Barge Retrial in Port

A U.S. District Court judge has reportedly delayed the retrial of two former Merrill Lynch & Co. executives charged with taking part in the so-called Nigerian barge case. The case is tied to an alleged Enron bogus-profits scheme. Jury selection in the retrial of Daniel Bayly, Merrill’s former...

By Stephen Taub • Jan. 24, 2008

A Monster Case of Backdating

The former CEO of Monster Worldwide Inc., Andrew McKelvey, was charged with securities fraud and conspiracy in connection with the backdating of seven years of employee stock option grants.The backdating cited in the indictment resulted in more than $300 million of inflated earnings for Monster t...

By Stephen Taub • Jan. 23, 2008

Supremes Rebuff Enron Investors

The U.S. Supreme Court on Tuesday dealt another blow to investors who lost money as a result of a corporate fraud. The high court refused to hear a case brought by Enron investors against a number of banks that conducted business with Enron, according to published reports. The plaintiffs had bee...

By Stephen Taub • Jan. 22, 2008

Tyson Foods Ducks Out

Five months after a blistering Delaware Chancery Court ruling questioned Tyson Foods Inc.’s motivations in spring-loading its stock options, former CEO Don Tyson and a partnership that owns Tyson Foods shares agreed to pay $4.5 million to settle before the court suit comes to trial.To settle the...

By Roy Harris • Jan. 21, 2008

The Battle of StoneRidge

Sighs of relief were audible in boardrooms across America this week at the Supreme Court’s long-awaited decision in StoneRidge Investment Partners v Scientific Atlanta. At issue were the circumstances in which a company can be sued for “scheme liability”. On January 15th the court ruled that a fi...

By Economist Staff • Jan. 21, 2008

The All-Republican SEC?

Annette Nazareth, the Securities and Exchange Commission’s lone Democrat, will step down on January 31st of this year, according to a letter she sent to President George W. Bush.The letter, obtained by CFO.com, puts an expiration date on her tenure of more than nine years at the SEC. Nazareth ann...

By Alan Rappeport • Jan. 21, 2008

SkyCaddie Maker’s CFO Charged with Stealing $2M

The chief financial officer of the Mississippi company that makes the SkyCaddie global-positioning-system rangefinder for golfers was arrested for allegedly embezzling more than $2 million, according to the Madison County Herald. Mahalingam Shrinivas was arrested after an internal investigation ...

By Stephen Taub • Jan. 21, 2008

Friend’s Tip Costs a Bundle, Says SEC

In the latest in a series of cases against friends and relatives accused of insider trading (see related articles), the Securities and Exchange Commission settled charges Tuesday with Morris Gad, a friend of a former audit-committee member of NBTY, a nutritional-supplements distributor.The SEC al...

By Tim Reason and Stephen Taub • Jan. 18, 2008

Profits Are Shipwrecked!

A prominent oceanographer credited with the most lucrative discovery of a shipwreck settled insider-trading charges on Thursday with the Securities and Exchange Commission.Ernesto Tapanes, a consultant with Odyssey Marine Exploration, was accused of illegally making $107,000 by buying shares of t...

By Stephen Taub • Jan. 18, 2008

Duke Energy Charged with Kickback Scheme

Employees of Duke Energy have acknowledged payments of about $22 million a year to big corporate customers as part of a deal the utility made to get an electric rate increase in southern Ohio, The Cincinnati Enquirer reported Friday.In a class-action antitrust lawsuit filed by a group of lawyers ...

By Stephen Taub • Jan. 18, 2008