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

Former Exec Gets Five Years for Embezzlement

The third former employee to be sentenced for her role in a $36 million embezzlement scheme at construction company PBS&J will serve up to 63 months in federal prison. Maria Garcia, a former finance systems manager at the company, had pleaded guilty to charges she participated in the scheme w...

By Stephen Taub • July 30, 2007

Court Fines Mining Company for Snubbing SEC

A federal court has found International Energy and Resources Inc. in contempt of court for not complying with a Securities and Exchange Commission subpoena to produce documents.Howard Matz, U.S. district judge for the Central District of California, also ordered IER to pay a fine of $1,000 for ea...

By Stephen Taub • July 30, 2007

Marching to Different Drummers

A report by the New York Federal Reserve on hedgefunds set off alarm bells recently when the bank seemed to suggestthat funds were stockpiling too many eggs in one basket.Headlines based on the paper, by Federal Reserve economistTobias Adrian, warned that hedge funds have concentratedrisk in too ...

By Joseph McCafferty • July 30, 2007

Prison Qwest: Nacchio Is Sentenced

Former Qwest Communications chief executive Joseph Nacchio has been sentenced to six years in prison for his insider-trading conviction, according to the Associated Press. Nacchio was also ordered to forfeit $52 million in assets he gained from the illegal stock sales in the next 15 days.In addit...

By Stephen Taub • July 27, 2007

UPS Gets 195 Workers to Mail It In

UPS says it recorded a $68 million charge stemming from an early retirement program.The package-delivery company had offered 640 employees a special voluntary separation opportunity (SVSO), which was accepted by 195, or 30 percent, of the eligible employees during the first quarter. They all work...

By Stephen Taub • July 27, 2007

Coherent Unclear on Options Fix

Several months after acknowledging it is the subject of a Securities and Exchange Commission probe, Coherent Inc. admitted finding “a significant number” of stock-option grants that were incorrectly dated.However, the maker of commercial and scientific lasers has yet to determine how it will acco...

By Stephen Taub • July 27, 2007

Revenue Games at Cardinal Health

Cardinal Health will pay the Securities and Exchange Commission $35 million to settle charges that it had used improper accounting methods and filed misleading financial reports from 2000 to 2004. The SEC’s complaint against the drug and equipment distribution company included allegations that Ca...

By Sarah Johnson • July 26, 2007

The Credibility Gap

A CFO gives a reasonably good presentation to analysts but botches the question-and-answer session, or doesn’t go much beyond the P&L and cash flow statement to provide operational insight into the business, or fails to tailor information to take into account the varied needs of investors. Th...

By Eila Rana • July 26, 2007

Spousal Abuse: SEC Charges Two with Insider Trading

In its fourth so-called “pillow talk” case in two months, the Securities and Exchange Commission has charged yet another couple with illegal insider trading.In the current case, the SEC accused Shane Bashir Suman, a former employee of Toronto-based medical device maker MDS Inc., of stealing confi...

By Stephen Taub • July 24, 2007

Survey: Companies Go Long on Earnings Guidance

Companies are providing more long-term forecasting and performance measurements and focusing less on quarterly earnings-per-share guidance, according to a recent survey by the National Investor Relations Institute.Of the 752 companies that provide earnings guidance and responded to the survey, 58...

By Alan Rappeport • July 24, 2007

You Have a Right to an Attorney (on the Company’s Dime)

One week after a federal judge dropped a case against 13 former KPMG employees because prosecutors had pushed the accounting firm into not paying their legal fees, a House committee will mark up a bill that would alleviate pressure on companies to make similar agreements. On Tuesday, the Subcommi...

By Sarah Johnson • July 24, 2007

Chief Economist Spatt to Leave SEC

Securities and Exchange Commission chief economist Chester Spatt, who also serves as director of the Office of Economic Analysis (OEA), is leaving the agency after three years.At the end of this month he plans to return to Carnegie Mellon University, where he serves as Mellon Bank professor of fi...

By Stephen Taub • July 20, 2007

CFO Guilty of Ponzi Death Scam

The former chief financial officer of Mutual Benefits Corp. and two others pled guilty to charges stemming from their roles in a billion-dollar securities offering by the “viatical and life settlement” company, which was closed by federal regulators in May 2004.In a viatical or life settlement tr...

By Stephen Taub • July 19, 2007

Quick: How Many CFOs Have Been Convicted?

While Enron, WorldCom, and Tyco offer the marquee examples of CFOs brought down in the past five years of legal action against accounting abuses, a report issued by the President’s Corporate Fraud Task Force calculates that at least 53 finance chiefs have been convicted since 2002.In what is beco...

By Kate Plourd • July 18, 2007

Wells Notices Sideline Finance Execs

Insurance company Assurant placed its CEO and CFO, as well as a divisional CFO, on leave Tuesday after it became clear that the three executives are likely to face charges stemming from the Securities and Exchange Commission’s investigation into the company’s use of finite insurance.Assurant said...

By Tim Reason and Stephen Taub • July 17, 2007

Problems Broaden for Ex-Broadcom Chief

Broadcom Corp. co-founder and ex-CEO Henry T. Nicholas III may be thinking back to the good old days when his only problem was dealing with a federal probe of alleged stock-options backdating . On Friday, reports circulated widely about an ex-employee’s lawsuit claiming that the billionaire’s lea...

By Roy Harris • July 16, 2007

Frank Slams SEC Terror Tool

Rep. Barney Frank (D-Mass.), chairman of the House Committee on Financial Services, is the latest critic of the Securities and Exchange Commission’s new terrorism tool.On Friday Frank’s office released a letter to SEC chairman Christopher Cox criticizing the tool for listing companies that no lon...

By Alan Rappeport • July 13, 2007

Conrad Black Convicted of Fraud

Conrad Black, the former chairman and chief executive of Hollinger International Inc., was found guilty by a federal jury on Friday of three counts of mail fraud and one count of obstruction of justice and acquitted of nine other counts, including racketeering and misuse of corporate perquisites,...

By David Katz • July 13, 2007

Like Father, Like Son: SEC Charges Two with Backdating

By approving misdated stock option grants, the ex-CEO of Engineered Support Systems profited by $8.9 million with the full support of a compensation-committee member — who also happened to be his son — according to the Securities and Exchange Commission. On Thursday, the SEC charged ESSI founder ...

By Sarah Johnson • July 12, 2007

Refco Examiner Cites Grant Thornton, E&Y

The examiner appointed in the scandal-plagued 2005 bankruptcy of Refco Inc. named Grant Thornton LLP, Ernst & Young LLP, and the law firm of Mayer, Brown, Rowe & Maw as those most likely to face claims from Refco’s debtors.Refco, a financial-services firm, swiftly collapsed in bankruptcy ...

By Roy Harris • July 12, 2007

DOL Sees Through X-Ray Company’s Scheme

A federal judge has ordered a Miami company to pay nearly $1.2 million in restitution for allegedly using its employees’ retirement funds to pay company expenses. The Department of Labor sued X-Ray Equipment Co. (XEC) and its president, Colen Carter, in February, charging that the private company...

By Sarah Johnson • July 11, 2007

Ganging Up on the Lawyers

If the plaintiffs’ bar is being undercut by the criminal investigation of Milberg Weiss, it is only the latest blow to what seems to be a declining historical interest in class-action suits.The Stanford Law School Securities Class Action Clearinghouse, working with Cornerstone Research, recorded ...

By Roy Harris • July 11, 2007

Bershad’s Confession: Death Knell for Plaintiffs’ Bar?

When David Bershad agreed to talk about the scheme his former firm, Milberg Weiss, cooked up to provide attorneys with a steady supply of paid class-action plaintiffs, it was music to the ears of corporate tort reformers everywhere.That’s because tarnishing Milberg Weiss, one of the biggest and m...

By David Katz • July 10, 2007

Ensign Gets Finance Committee Seat

The Senate GOP Conference on Tuesday gave National Republican Senatorial Committee Chairman John Ensign (Nev.) the Finance Committee seat that became vacant when Wyoming Sen. Craig Thomas passed away in early June.Though there was some talk within GOP circles of giving the Finance seat to another...

By Erin P. Billings • July 10, 2007