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

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

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 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

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

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

SEC Goes Aeropostale

Aeropostale Inc. said on Wednesday that the Securities and Exchange Commission has launched a formal investigation into the circumstances surrounding the November 2006 firing of Christopher Finazzo, who was executive vice president and chief merchandising officer.The company said at the time Fina...

By Stephen Taub • Jan. 17, 2008

Peregrine Exec Admits Lie to FBI

A former executive of Peregrine Systems pleaded guilty to one count of lying to the FBI during an investigation into the software company’s massive accounting scandal earlier in the decade, the San Diego Union-Tribune reported. Gary Lenz is the 12th individual to plead guilty to charges related...

By Stephen Taub • Jan. 17, 2008

Verdict Nicks Apollo as Plaintiffs Rebound

After being beaten down on Tuesday by the Supreme Court, investors filing civil lawsuits came out on top in a federal court case against Apollo Group Inc., the for-profit company that owns the for-profit University of Phoenix.A U.S. district court jury in Phoenix ruled that Apollo fraudulently mi...

By Roy Harris • Jan. 16, 2008

First Convicted Backdater Sentenced to Prison

The former chief executive officer of Brocade Communications Systems was sentenced to 21 months and prison and ordered to pay a $15 million fine. He is the first executive to go to trial and be convicted for orchestrating a scheme to illegally backdate stock options.According to The Wall Street J...

By Stephen Taub • Jan. 16, 2008

Ex-PwC Pals were Inside Traders, SEC Says

The Securities and Exchange Commission charged two former employees of PricewaterhouseCoopers with insider trading Tuesday, accusing them of using client information to buy stock prior to corporate takeovers. PwC reported the co-workers, who were friends, to the SEC.Gregory Raben, 30, formerly an...

By Alan Rappeport • Jan. 15, 2008

Insider-Trading Conviction Scrapped

A federal appeals court has overturned the conviction of Homestore Inc. founder Stuart Wolff, who had been sentenced to 15 years in prison for insider trading, ruling that the trial judge should have recused himself because he had a financial interest in the case, the San Francisco Chronicle rep...

By Kate Plourd • Jan. 15, 2008

Supreme Court Raises Bar for Class Actions

In a closely watched decision, the U.S. Supreme Court created new barriers to investors suing companies for alleged fraud aimed at inflating stock prices.The 5-3 ruling, with the majority opinion written by Justice Anthony Kennedy, gave a measure of protection from securities suits to suppliers, ...

By Roy Harris • Jan. 15, 2008

Plaintiffs’ Bar 0, Corporate Defendants 5

By ruling in the StoneRidge v. Scientific-Atlanta case that third parties complicit in corporate wrongdoing are not liable without themselves directly misleading investors, the Supreme Court has continued a “campaign to render the private cause of action under [the fraud law] toothless,” Justice ...

By Roy Harris • Jan. 15, 2008