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

Foundry Takes Options Blackout Charge

Foundry Networks, one of at least 140 companies under investigation for alleged stock options backdating, has revised its second-quarter results to take a non-cash charge related to compensation costs. The change makes up for adjustments made during the networking services provider’s recent resta...

By Stephen Taub • Aug. 10, 2007

Campos Steps Down from SEC

Commissioner Roel C. Campos will leave the Securities and Exchange Commission in one month and return to the private sector after five years of service, the SEC said Thursday. The Democrat and former prosecutor is serving his second term, which was set to end June 5, 2010. His departure comes ami...

By Alan Rappeport • Aug. 9, 2007

It’s Liberty City for “Grand Theft Auto” Ex-Counsel

Kenneth I. Selterman, the former general counsel at Take-Two Interactive Software, was sentenced to three years of probation for falsifying business records in connection with the improper backdating of employee stock options. Justice Brenda S. Soloff also sentenced Selterman to 200 hours of comm...

By Stephen Taub • Aug. 9, 2007

Chilling Thoughts

Risk, like luck, comes in two varieties: good and bad. The latter you hope toavoid, the former to capitalize on. Lately, however, there’s been precious little capitalizing. Companies have been decidedly risk-averse for years, accumulating piles of cash and returning it to shareholders rather than...

By Scott Leibs • Aug. 8, 2007

Oh, the Inanity!

Call it a “blimp” on the regulatory radar screen.The Securities and Exchange Commission Monday announced final judgments against a penny-stock company and four of its officers for falsely claiming that the company, Platforms Wireless International Corp., provided airplane- and blimp-mounted wirel...

By Tim Reason and Stephen Taub • Aug. 8, 2007

Who Will Pick Up the Terror Tab?

The Terrorism Risk Insurance Act (TRIA) will expire at the end of this year, and as Congress prepares to debate a second extension of the act (the first passed in 2005), the stakes have changed.For one, more than 60 percent of U.S. corporations now participate, and despite the absence of any trig...

By Laura DeMars • Aug. 8, 2007

American Express to Pay $65M Money-Laundering Fine

American Express Co. will pay $65 million to resolve allegations that one of its subsidiaries had violated the federal government’s anti-laundering laws. The financial services giant also entered into a deferred prosecution agreement with the Department of Justice in connection with a charge that...

By Stephen Taub • Aug. 7, 2007

Brocade’s Reyes Guilty of Backdating

A federal jury convicted former Brocade Communications Systems CEO Gregory Reyes on all 10 felony counts, giving the federal government an opening victory in its war against executives implicated in schemes to backdate stock-option grants. The verdict, in the Justice Department’s first case to re...

By Stephen Taub • Aug. 7, 2007

Sonus Networks Takes $54M Backdating Charge

Sonus Networks has recorded a compensation expense of approximately $54 million to correct errors in the way it accounted for stock options granted from 2000 through 2005. The company recorded the charge in its newly filed regulatory filings, which had been delayed while it reviewed the dates ass...

By Stephen Taub • Aug. 3, 2007

What’s Next? Investor Thoughts on Sarbox Costs

The cost of complying with the Sarbanes-Oxley Act may be tapering off, but the expense still weighs down some balance sheets, according to a new report by Foley and Lardner, a law firm specializing in corporate compliance. Investors, however, do not seem to mind.From 2005 to 2006, average Sarbox-...

By Alan Rappeport • Aug. 3, 2007

Count ‘Em: 63 CFOs Convicted in Past Five Years

The Department of Justice, which has said that at least 53 finance chiefs have been convicted in the five-year life of the President’s Corporate Fraud Task Force, has provided CFO.com with a list of 53 people who either pleaded guilty or were found guilty. After recalculating to include other cas...

By Kate Plourd • Aug. 3, 2007

SEC Mulls Action Against United Rentals

United Rentals Inc. says the staff of the Securities and Exchange Commission plans to take some sort of action against it following a probe of possible accounting irregularities.According to the equipment-rental company, the SEC staff has indicated it will ask the commissioners to engage in settl...

By Stephen Taub • Aug. 3, 2007

“Grand Theft Auto” Founder Eludes Prison

The first CEO convicted for his role in a stock-option backdating scheme was sentenced to five years of probation, according to Bloomberg. Former Take-Two Interactive Software Inc. chief executive Ryan Brant pleaded guilty in February to falsifying business records.Under his plea deal with Manhat...

By Stephen Taub • Aug. 2, 2007

The Beazer Factor

Rumors that Beazer Homes USA Inc. was about to file for bankruptcy sent shares of the homebuilder tumbling as much as 40 percent Wednesday, while broader market averages went into another tailspin, fueling fears that the sub-prime mortgage crisis is worsening by the day.However, the company quick...

By Stephen Taub • Aug. 2, 2007

Walker’s Way

The kings of private equity are better at making money than making friends. Reviled in Europe as the spawn of Gordon Gekko and pilloried in America for paying nugatory taxes, they have an image problem to match their bank balances. Efforts to be seen in a more favourable light—such as the formati...

By Economist Staff • Aug. 1, 2007

The SEC Rules

This is the second of a three-part series examining the state of accounting five years after passage of the Sarbanes-Oxley Act.If Enron made accounting sexy and the Sarbanes-Oxley Act made it lucrative, the current power struggle over rule-setting makes it both compelling and consequential. Accou...

By Kate O'Sullivan • Aug. 1, 2007

Black’s Former Company Settles Suits

Sun-Times Media Group, Inc. has agreed to settle securities class action suits pending against it and a number of its former directors and officers. In addition, the company — formerly called Hollinger International and controlled by Conrad Black — has worked out an agreement to settle litigation...

By Tim Reason • Aug. 1, 2007

Five Years Under the Thumb

For the leaders of corporate America it has been five long years. The Sarbanes-Oxley Act, widely known as SOX, was signed into law on July 30th 2002 by George Bush, who called its tough new rules the “most far-reaching reforms of American business practices since Franklin Roosevelt was president”...

By Economist Staff • July 31, 2007