No Double Jeopardy for Ex-Symbol Execs

A federal appeals court ruled that a former Symbol Technologies finance executive and another former executive cannot be retried on charges stemming from the company’s accounting scandal.A three-judge panel of the 2nd Circuit Court of Appeals said retrying former senior vice president of finance ...

By Tim Reason • Aug. 27, 2007

Cutting the Fat: Z Trim May Restate

Officials at Z Trim Holdings are contemplating whether they should restate company financials following a probe into its stock-option practices. The news comes at the end of a week filled with bad news for the Illinois company, which makes a gel used to reduce fat in foods.Earlier this week, Z Tr...

By Sarah Johnson • Aug. 24, 2007

Boards Behaving Badly: A Delaware Primer

In a Delaware Court of Chancery case that he wrote “tests the boundaries of the business judgment rule,” Chancellor William B. Chandler III dealt infoUSA Inc. a setback, and drew guidelines for director conflicts of interest, and for board disclosures of internal investigations.His opinion, hande...

By Roy Harris • Aug. 23, 2007

Refco Suit Hits Grant Thornton, PwC, E&Y

In a 158-page lawsuit seeking more than $2 billion in damages, trustees representing the failed commodities brokerage Refco Inc. have charged the company’s accounting, financial, and legal advisers with knowingly aiding a group of Refco insiders to plunder millions of dollars in company assets. ...

By Kate Plourd • Aug. 22, 2007

The Game Is Up

The old-fashioned financial system was like Old Maid, a parlour game once beloved of small children. The banks were like players, dealt hands from a pack of cards, which they swapped among each other. At the end, one player was left holding a lonely queen—a bad debt, if you will—and lost. Over th...

By Economist Staff • Aug. 21, 2007

SEC Case against Amex ex-CEO Thrown Out

A Securities and Exchange Commission administrative law judge has decided that the SEC can’t censure former American Stock Exchange chairman and chief executive Salvatore Sodano for a past failure to enforce exchange rules. In his ruling, Judge Robert Mahony dismissed the case brought against So...

By Kate Plourd • Aug. 21, 2007

SEC: Sentinel Used Credit Crisis to Hide Losses

The Securities and Exchange Commission has charged Sentinel Management Group with misleading investors and using the credit crisis to hide losses and imprudent operations, according to the Associated Press. In a civil suit filed in U.S. District Court in Chicago, the SEC charged Sentinel with “fr...

By Marie Leone • Aug. 21, 2007

Tyson Stung in Spring-loading Case

Tyson Foods Inc. got another chance for Delaware’s Court of Chancery to throw out claims that the company improperly spring-loaded stock-option grants, dating options ahead of favorable company news so the value would likely rise. But the judge slapped the Tyson board down with harsh suggestions ...

By Roy Harris • Aug. 20, 2007

The CFO Stands Alone

The chief financial officer of Taiwan-based microchip maker Himax Technologies was named as the sole defendant in a class action securities lawsuit alleging that he violated securities laws, breached his fiduciary duties, and made false or misleading statements in connection with the company’s pu...

By Kate Plourd • Aug. 20, 2007

Former McKesson VP Settles SEC Charges

A former McKesson Corp. executive has settled charges that he helped to inflate revenue and net income at a software vendor that later merged with the pharmaceutical giant. Michael Smeraski has agreed to pay $50,000 and put an end to the six-year-old civil fraud charges filed against him by the S...

By Sarah Johnson • Aug. 17, 2007

No Rx Required: CVS Probe Closed

CVS Caremark Corp. has disclosed that both the Securities and Exchange Commission and the U.S. Attorney’s office have ended an inquiry into the drugstore operator’s stock-options-granting practices and relocation of Caremark Rx Inc. headquarters to Nashville from Birmingham.In May 2006, an invest...

By Kate Plourd • Aug. 17, 2007

“Failure to Question” Snags Impath Exec

A three-panel judge has affirmed a former corporate president’s conviction for conspiracy, securities fraud, and filing false statements with the Securities and Exchange Commission.More than a year ago, Richard Adelson, who presided over cancer-data company Impath before it went bankrupt, was sen...

By Sarah Johnson • Aug. 17, 2007

Spinout: Grand Theft Maker on Notice

The Securities and Exchange Commission has told video-game publisher Take-Two Interactive that it may file charges against the company and its executives related to an investigation into the company’s historical stock-option-granting practices.The game maker, best known for its “Grand Theft Auto”...

By Kate Plourd • Aug. 17, 2007

Jumping on the Buyback Bandwagon

As the stock market continues to sweat out the dog days of August, more companies are joining the ranks of those buying back shares. On Wednesday, at least three repurchase plans were announced. For example, storage-solutions company Network Appliance announced its intention to buy back up to $1 ...

By Sarah Johnson • Aug. 16, 2007

DoJ: Ease Up on Vendors’ Fraud Liability

The Department of Justice has filed a friend-of-the-court brief with the U.S. Supreme Court opposing lawsuits that hold third parties equally liable for a business partner’s securities fraud.Filed on Wednesday, the U.S. Solicitor General’s amicus brief flies in the face of Securities and Exchange...

By Sarah Johnson • Aug. 16, 2007

Another Broadcom Exec Receives Wells Notice

The Securities and Exchange Commission has sent David Dull, general counsel of Broadcom Corp., notification that it may bring charges against him related to its ongoing investigation into the company’s stock-option granting practices. Earlier this week, Broadcom revealed Dull had received the Wel...

By Sarah Johnson • Aug. 15, 2007

A Room of Their Own

First came virtual annual meetings, then “paperless” proxies,and now the Internet may play a role in shaping another aspect of company-shareholdercommunications: ongoing dialogue between shareholders and management,made feasible by dedicated chat rooms.In May the Securities and Exchange Commissio...

By Kate Plourd • Aug. 15, 2007

Critical Masses

The movement to scale back recent financial reforms has turned into a veritable book-of-the-month club as one organization after another issues reports that call for major changes to everything from Sarbanes-Oxley to shareholders’ rights. On the heels of last fall’s report by the Committee on Cap...

By Alix Stuart • Aug. 15, 2007

CA’s Kumar Reporting to Prison

Former CA Inc. chairman and chief executive Sanjay Kumar begins serving his 12-year prison sentence today. According to Newsday, he had been given the summer to sell possessions to pay $50 million in restitution. The Long Island paper noted that Kumar had worked out a deal to pay off the remainin...

By Stephen Taub • Aug. 14, 2007

HCA Settles Holder Suits for $20 Million

HCA Inc. agreed to pay $20 million to shareholders who had accused executives of making false statements that helped boost the company’s stock price. Under the deal, according to the Associated Press, the Nashville-based hospital management company didn’t admit to any wrongdoing.The AP said that ...

By Stephen Taub • Aug. 14, 2007

BDO Ordered to Pay $170M in Fraud Case

BDO Seidman is on the hook for at least $170 million after a jury ruled on Friday that the accounting firm was negligent in failing to detect a massive fraud that cost a Portuguese bank $170 million, according to the Associated Press. The award could be higher depending on the amount of punitive ...

By Stephen Taub • Aug. 14, 2007

Terms Begin for the Rigases

Adelphia Communications founder John Rigas and son Timothy Rigas, its former CFO, reported to North Carolina’s Butner Federal Correctional Complex to begin serving their long prison terms.The two cable company executives were convicted in 2004 of securities fraud, conspiracy to commit bank fraud,...

By Stephen Taub • Aug. 13, 2007

Ports and Storms

With the planet warming and the weather doing outlandish things, it is odd to think that bets on natural disasters might turn out to be a safe haven for investors. But that is how they may be marketed as turmoil grips global financial markets. Correlations between asset classes are appearing in u...

By Economist Staff • Aug. 13, 2007

Auditors, Banks Avoid Parmalat Charges

A federal judge threw out two separate cases against bankers and auditors of Parmalat Finanziara SpA, the Italian dairy company that collapsed in 2003 after it was rocked by accounting fraud, according to a report from the Associated Press. The lawsuits were brought by two former U.S. subsidiarie...

By Stephen Taub • Aug. 10, 2007

It’s Final: Assurant Fires Two over Finite Deals

Assurant Inc. says it fired the two executives who were linked to a Securities and Exchange Commission investigation into loss-mitigation products, also called finite insurance. The two — Michael Steinman, former senior vice president and chief actuary, and Dan Folse, former vice president-risk m...

By Stephen Taub • Aug. 10, 2007