Chavez Costs AES $638 Million

The issue of political risk was underscored Thursday when AES reported its most recent quarterly results.The electric power company said it recognized a $638 million impairment charge in connection with the forced sale of its equity stake in its Venezuelan subsidiary C.A. La Electricidad de Carac...

By Stephen Taub • June 21, 2007

Shareholder Lawsuit Ruling a Boon?

The U.S. Supreme Court has upheld a 1995 law that established strict standards for proving corporate fraud in shareholder lawsuits. In an 8-to-1 decision handed down on Thursday, the high court said that to successfully prove that a company intentionally misled investors — and thus committed frau...

By Marie Leone • June 21, 2007

Ex-Enron CFO Takes SEC Plea Deal

The Securities and Exchange Commission settled aiding and abetting charges with one of Enron’s former top finance executives. The charges were linked to the infamous Nigerian barge deal with Merrill Lynch.Under the plea deal, Jeffrey McMahon, Enron’s former treasurer and chief financial officer a...

By Stephen Taub • June 21, 2007

Dell’s Third Delisting Notice Wasn’t a Charm

Nasdaq sent Dell Inc. a fourth delisting notice, indicating that the computer maker is out of compliance with exchange requirements because it is delaying its financial report for the May 4 first quarter of its fiscal 2008.Similar notices to the latest one, dated June 14, were sent after Dell del...

By Stephen Taub • June 19, 2007

If Byrd Sings, How Will the Brocade Case Swing?

The second day of the stock-options-backdating criminal trial of former Brocade Communications CEO Gregory L. Reyes began with clear signals that the case could turn on what ex-CFO Michael J. Byrd says.On day one, defense attorney Richard Marmaro told the jury that the history of granting stock o...

By Roy Harris • June 19, 2007

Ex-CEO of Enron Broadband Sent to Prison

A former Enron executive who pled guilty and testified against former CEO Jeffrey Skilling and founder Kenneth Lay is now headed to jail for his own role in artificially boosting the company’s fortunes.Kenneth Rice, once the CEO of the Enron Broadband Services, was sentenced Monday to two years a...

By Stephen Taub • June 19, 2007

Atari on Pause after Goodwill Charge

After losing nearly one-third of what it made in revenues last year, Atari Inc. says it will take a goodwill impairment charge equal to all or a substantial portion of the $54.1 million of goodwill on the company’s books. The impairment charge will increase the company’s net loss of about $17.2 m...

By Stephen Taub • June 15, 2007

Dell Delays Another Report

Questions arising from an audit-committee investigation into Dell Inc. have forced the company to delay it most recent quarterly filings. Dell officials say the company will delay quarterly reports for the first three months of fiscal 2008, which ended May 4.The Securities and Exchange Commission...

By Stephen Taub • June 15, 2007

Tyco Noteholders Send Warning

An ad hoc committee of Tyco noteholders is threatening to delay the company’s plan to break up into three companies, slated to happen later this month. In a letter fired off to the conglomerate’s board of directors, the group said the plan, which calls for Tyco to spin off two companies, could be...

By Stephen Taub • June 15, 2007

WorldCom Fair Fund Payout Tops $500 Million

The Securities and Exchange Commission has distributed more than $500 million to WorldCom investors as restitution for the company’s accounting fraud, it announced yesterday. Another $250 million will be distributed later this year upon a final court resolution of any contested claims, notes Rich...

By Stephen Taub • June 15, 2007

The Stoneridge Showdown

It is, by general consent, the most important securities-litigation clash for a generation. A case now before the Supreme Court, Stoneridge v Scientific-Atlanta, is shaping up to be a key test of attitudes towards shareholder class actions. A decision in favour of aggrieved investors would greatl...

By Economist Staff • June 15, 2007

SEC’s Insider-trading Pace: Quickening?

In what seems to be a recently stepped-up focus on insider trading, the Securities and Exchange Commission announced the settlement of two such cases on Wednesday.In one of the actions, the SEC settled a case with former law firm partner who got wind of a forthcoming corporate acquisition while h...

By Stephen Taub • June 14, 2007

Bush, SEC Differ in Fraud Liability Case

President Bush may have blocked a Securities and Exchange Commission amicus brief siding with investors in a Supreme Court scheme liability case, according to the Associated Press. The U.S. solicitor general — who files the government’s opinion on Supreme Court cases — reportedly let the deadline...

By Sarah Johnson • June 13, 2007

How to Get Super Refunds via Superfund

A multitude of corporations now have the green light to file suit to recoup some of their toxic waste clean-up costs. On Monday the Supreme Court ruled that corporations that voluntarily clean up toxic waste sites have the right to sue other responsible parties, including the federal government, ...

By Laura DeMars • June 13, 2007

Whistle-blowers Face High Burden of Proof

When the Sarbanes-Oxley Act created legal protection for employees who point out financial fraud, corporate lawyers feared the law would open the door to frivolous suits by disgruntled workers. The law said all an employee needed to trigger whistle-blower protection was simply “a reasonable belie...

By Sarah Johnson • June 12, 2007

DoJ Stifles SEC Message to High Court

The Bush administration has decided not to file an amicus brief in support of shareholders in a Supreme Court case that could determine whether business partners of companies that commit fraud can also be held directly liable for securities violations. The Securities and Exchange Commission repor...

By Sarah Johnson • June 12, 2007

No Third Strike for Ex-CFO of Lason

William J. Rauwerdink, the former CFO of Lason, Inc., was sentenced to 3 years and nine months in prison for his role in the company’s accounting fraud nearly 10 years ago, according to the U.S. attorney’s officeRauwerdink pleaded guilty last November to conspiring to commit mail, wire, and bank ...

By Stephen Taub • June 11, 2007

Whistle-blowers Never Win

Of nearly 1,000 complaints filed under the whistle-blower provisions of the Sarbanes-Oxley Act since July 2002, not one has ultimately resulted in the whistle-blower making it past company appeals and winning the case.Section 806 of Sarbox, intended to protect employees of public companies from r...

By Stephen Taub and Tim Reason • June 8, 2007

Bookkeeper Sentenced to 4 Years for Embezzlement

Angela Buckborough Platt, who pleaded guilty to embezzling $6.9 million from her employer, has been sentenced to four years in prison, according to the Associated Press. Platt, who had earned $40,000 a year working for J&J Materials of Rehoboth, Mass., spent the money on a ranch in Vermont, ...

By Stephen Taub • June 8, 2007

Aussie CFO Gets 3-Year Prison Term

Dominic Fodera, the former chief financial officer of HIH Insurance Ltd., was sentenced to three years in prison for authorizing the release of a prospectus that omitted a material fact. The $4.5 billion collapse of HIH in 2001 is considered Australia’s biggest corporate failure.In a press releas...

By Stephen Taub • June 7, 2007

Swissair Execs Acquitted of Mismanagement

Nineteen executives and consultants have been acquitted of charges they caused the 2001 collapse of Swissair. A Zurich district court has awarded some of the managers compensation totaling $2.5 million, according to the Associated Press.Among those acquitted was Jacqualyn Fouse, who served as chi...

By Stephen Taub • June 7, 2007

UBS Settles with Enron Creditors

UBS AG agreed to pay $115 million to settle legal claims by Enron Creditors Recovery Corp., formerly Enron Corp., stemming from equity derivative contract payments that Enron Creditors sought to recover from the investment bank.The Swiss bank said in its own press release that it is settling the ...

By Stephen Taub • June 7, 2007

SEC’s Cox Writes Letter for Libby

Securities and Exchange Commission chairman Christopher Cox is one of many letter writers who supported I. Lewis “Scooter” Libby’s character before he was sentenced to two and a half years in prison. In an April 23 letter sent on personal stationery that does not mention his role in the SEC, Cox ...

By Sarah Johnson • June 6, 2007

First Sarbox Whistle-blower Loses Case

Five years after becoming the first person to win protection under the whistle-blower provision of the Sarbanes-Oxley Act, former Cardinal Bancshares CFO David Welch has lost his case. The Department of Labor’s Administrative Review Board ruled recently that it would not adopt an administrative l...

By Stephen Taub • June 5, 2007

Did IBM Show Analysts a Phony Chart?

International Business Machines Corp. settled Securities and Exchange Commission charges stemming from what the SEC said was misleading information provided in an April 5, 2005 IBM conference call that discussed IBM’s expensing of employee stock options.IBM neither admitted to nor denied the SEC’...

By Stephen Taub • June 5, 2007