Faulty Forecasts on a Roll

Faulty forecasts have been the downfall of many CFOs. Last year the retirement of Motorola’s finance chief, David Devonshire, coincided with the technology company dropping its revenue projections by a billion dollars in the first quarter. At Ericsson, the telecommunications giant, the CFO depart...

By Alan Rappeport • Feb. 11, 2008

Lerach Gets Two Years Behind Bars

Class-action lawyer William Lerach will serve two years in prison for his role in a kickback scheme at his former employer Lerach Coughlin Stoia Geller Rudman & Robbins, according to press reports. The attorney, who once led a $7 billion case against Enron, had won the ire of the corporate co...

By Sarah Johnson • Feb. 11, 2008

Finance Exec’s Loose Lips Sink Old Pal

You wouldn’t think finance executives need to be reminded to keep their mouths shut about the material, non-public information they normally possess. But here is yet another example that they do need reminders. The Securities and Exchange Commission has settled charges with an individual who ad...

By Stephen Taub • Feb. 11, 2008

City Investment Contracts Draw SEC’s Eye

The Securities and Exchange Commission is weighing whether to bring civil charges against Financial Security Assurance Holdings for bid-rigging in connection with the investments of municipalities. Financial Security, a subsidiary of Belgium-based Dexia Holdings, provides financial guaranty insu...

By Stephen Taub • Feb. 8, 2008

Does Mass. Law Force Sarbox on Nonprofits?

A Massachusetts health-care workers’ union is asking board members of Beth Israel Deaconess Medical Center to apply Sarbanes-Oxley Act disclosure rules to the nonprofit hospital’s audits.The 1199 SEIU United Healthcare Workers East sent letters to 6 of Beth Israel’s 18 board members, who also ser...

By Kate Plourd • Feb. 8, 2008

Restructured Products

Hounding credit-rating agencies has become the bloodsport of choice for moneymen. At a conference this week one speaker announced, to raucous laughter, that he had just received a news flash: “Moody’s has downgraded Fitch, Fitch has cut Moody’s in retaliation, and Standard & Poor’s has put it...

By Economist Staff • Feb. 8, 2008

Donaldson Slams “Pendulum Pushers”

William Donaldson, the former Securities and Exchange Commission chairman, asserted on Wednesday that the regulatory pendulum has swung too far toward deregulation, criticizing the movement toward “vague, principles-based” financial reporting.Just as soon as the reforms instituted under the Sarba...

By David Katz • Feb. 7, 2008

How to Fix the Rating Agencies, Part II

In 2007, lawmakers waggled their fingers at the credit rating agencies for missing the mark in assessing the risks of mortgage-backed securities, a factor congressmen and senators claim partly led to the subprime-mortgage crisis. Now, nearly a year after the mortgage market meltdown, national and...

By Sarah Johnson • Feb. 7, 2008

SEC: And Then There Were Three

President George W. Bush rebuked the Senate on Thursday for failing to confirm more than 200 appointees to government agencies and federal courts, leaving key posts unfilled at a critical time.The deadlock has been especially draining for those responsible for handling the U.S. economy and financ...

By Alan Rappeport • Feb. 7, 2008

To Catch a Country

When a federal court overturned the Securities and Exchange Commission’s plans to register hedge funds in June 2006, it seemed unlikely the regulator would ever lose a larger fight to regulate large pools of investment capital. At the time, hedge funds were estimated to control as much as $1.4 tr...

By Tim Reason • Feb. 7, 2008

“Sham” Licenses Cost ex-KPMG Unit Principal

The Securities and Exchange Commission has settled its three-year-old case with a former KPMG Consulting principal who was involved in Peregrine Systems’ accounting fraud. Larry Rodda has agreed to pay the SEC $80,000 to settle the charges. According to the regulator, Rodda signed four “sham” sof...

By Sarah Johnson • Feb. 6, 2008

Grant Thornton: U.K. Companies Slack on Filings

Although International Financial Reporting Standards may be simpler than America’s equivalent, that doesn’t mean they’re simple.They’re anything but, according to a recent survey by Grant Thornton’s U.K. division. The study found that nearly 60 percent of companies on the FTSE 350 claim they’re n...

By Alan Rappeport • Feb. 5, 2008

Seagate Drives Shareholder Value

Seagate Technology is stepping up with an aggressive plan to boost shareholder value.The disc-drive giant said it will increase its quarterly dividend by 25 percent, from $0.10 to $0.12 per share.At the same time, Seagate’s board of directors has authorized the repurchase of up to an additional $...

By Stephen Taub • Feb. 5, 2008

Welcome Aboard

In 1985, Norway’s government introduced a target of 40% female representation on public committees, a quota not met until 1997. The country’s listed companies were given less time to meet a similar quota. Under a law introduced in 2006, at least 40% of corporate board member posts were required t...

By Jason Karaian • Feb. 4, 2008

Running the SEC on the Cheap

The Bush administration is seeking a budget of $914 million for the Securities and Exchange Commission for fiscal 2009, an increase of less than 1 percent over projected spending this year of $907 million.The puny increase for the new Sept. 30 fiscal year, reported by Reuters, comes despite the S...

By Stephen Taub • Feb. 4, 2008

Step Change

In the low-lying coastal region of England’s East Anglia, climate change is already afoot. At Anglian Water, the £919m (€1.2 billion) utility that serves the region, more than 85% of the incidents that its wastewater emergency team was called on to address in the last fiscal year were weather-rel...

By Jason Karaian • Feb. 4, 2008

Sarbanes in Switzerland?

When it comes to administration, the Swiss are famous for their efficiency and attention to detail. It is somewhat surprising, then, that a number of changes to company audit law are only now coming into effect. Most notably, from January 1st 2008 auditors must verify internal control systems at ...

By Jason Karaian • Feb. 4, 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

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

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