Ex-Enron Broadband Exec Gets Two Years

Facing a possible five years in prison, Kevin Hannon, the former chief operating officer of Enron Broadband Services, was sentenced to two years for his role in the collapse of the one-time energy giant, according to the Associated Press.During the trial of Enron founder Kenneth Lay and former ch...

By Stephen Taub • June 4, 2007

Qwest CFO Settles Fraud Charges

Former Qwest Communications International CFO Robin R. Szeliga will pay $577,000 as part of a Securities and Exchange Commission settlement stemming from her role in the alleged accounting fraud at the telecommunications company.She consented to a judgment entered by a federal district court in D...

By Stephen Taub • June 4, 2007

SEC to Side with Investors in Enron Case

The Securities and Exchange Commission plans to support investors in a Supreme Court case that could determine whether business partners of fraudulent businesses can be held primarily liable for violating securities laws, according to the Washington Post.The U.S. solicitor general, who may file a...

By Sarah Johnson • June 4, 2007

Cardinal Settles Suit for $600 Million

Cardinal Health Inc. has agreed to pay $600 million to settle a class-action lawsuit regarding its financial reporting and disclosures between 2000 and 2004. The drug-distribution company had put aside that money in April in anticipation of the settlement.The settlement announcement comes one wee...

By Stephen Taub • June 1, 2007

Judge Blocks Fannie Mae Suit

A federal judge has ruled that shareholders may not pursue their derivative lawsuit against the board of directors of Fannie Mae following its $6.3 billion accounting scandal.U.S. District Judge Richard J. Leon dismissed the lawsuit because the shareholders failed to take the required initial ste...

By Stephen Taub • June 1, 2007

Did Rep. Wicker Move the Stock Market?

Rep. Roger Wicker (R-Miss.) may have moved the stock market Thursday, whether he meant to or not.Wicker issued a news release Thursday morning announcing that a company with connections to his district, International Truck and Engine Corporation, won a $623 million Defense Department contract to ...

By Nicole Duran • June 1, 2007

Fall Lineup Includes Secondary Actors

The outcome of shareholder lawsuits that placed some of the blame for Enron’s fraud on the energy giant’s business partners could hinge on an unrelated case that will be heard by the Supreme Court later this year. The case, which involves Charter Communications and its vendors, could answer the t...

By Sarah Johnson • June 1, 2007

Hedge-fund Bullies

If the Fox Network were ever to launch American Business Idol, Robert Chapman would be its Simon Cowell. The activist hedge-fund manager and founder of Chapman Capital once called the 78-year-old chairman of a target a “helpless Mr. Magoo–like figure” and referred to its CEO as “the dummy” in a 1...

By David Katz • June 1, 2007

Mercury, Brocade Hit with Steep Backdating Fines

The Securities and Exchange Commission settled separate civil fraud charges with Mercury Interactive LLC and Brocade Communications Systems, two of the earliest companies to be embroiled in the stock options backdating scandal. The settlements included the first fines to stem from such cases — $...

By Stephen Taub • May 31, 2007

Martha Stewart Living Settles for $30 Million

Shareholders of Martha Stewart Living Omnimedia will get $30 million under a settlement approved by a federal judge, according to an announcement by the law firm for the plaintiffs in a class-action lawsuit against the company. Under the deal, Martha Stewart personally contributed $5 million of h...

By Stephen Taub • May 31, 2007

The End of the Entity?

The Financial Accounting Standards Board pushed ahead Wednesday with plans to revise Statement 140, which accounts for transfers and servicing of financial assets. The rule dictates the treatment for qualifying special-purpose entities (QSPE), the dummy units that corporations may create to own a...

By Alan Rappeport • May 30, 2007

Ex-Brightpoint Risk Manager Held Liable

In the first case involving allegations of the fraudulent use of “finite insurance” to go to trial, a jury found a former director of risk management for Brightpoint liable for participating in the scheme. The Securities and Exchange Commission had charged Timothy Harcharik, the former insurance-...

By Stephen Taub • May 29, 2007

SEC Probes Dow, Cites Secret Meeting

The Securities and Exchange Commission has launched an inquiry into whether two senior executives at Dow Chemical secretly tried to seek a buyer for the chemical giant, according to The New York Times. In addition, the SEC is probing unusual trading in Dow stock as a result of the alleged actions...

By Stephen Taub • May 25, 2007

Citi Loses Bid to Dismiss Parmalat Suit

New Jersey’s Supreme Court rejected Citigroup’s motion to dismiss a $10 billion lawsuit by Parmalat, according to the Italian dairy company.The court reportedly upheld a January ruling by Bergen County Superior Court Judge Jonathan Harris, who turned aside the bank’s argument that Parmalat had br...

By Stephen Taub • May 24, 2007

HP Settles Charges over Board Shakeup

Hewlett-Packard settled administrative charges by the Securities and Exchange Commission regarding HP’s disclosure — or lack of disclosure — while the company was investigating leaks of confidential boardroom information to the press.The SEC found that several months before the public revelation ...

By Stephen Taub and Dave Cook • May 24, 2007

Ken Lay’s Widow Battles Feds over $13M

Kenneth Lay’s widow is locked in a battle with the federal government over $13 million in cash and property. The federal government is trying to seize that sum, asserting that the assets are tied to crimes committed by the former Enron chairman, according to the Houston Chronicle.Lay’s lawyers, h...

By Stephen Taub • May 24, 2007

KPMG Tax Shelter Case Could Be Dropped

The federal case against former KPMG employees accused of using fraudulent tax shelters may be weakening. The judge overseeing the case has questioned the constitutionality of the federal prosecutors’ behavior, particularly their use last year of techniques outlined in the so-called Thompson Memo...

By Sarah Johnson • May 24, 2007

SEC Adopts Rating-agency Rules

The Securities and Exchange Commission voted unanimously on Wednesday to adopt rules that give it greater oversight of credit-rating agencies and aim to open the market to more competition.The rules implement the Credit Rating Agency Reform Act of 2006, signed into law last October, which abolish...

By Alan Rappeport • May 23, 2007

EFI Faces Nasdaq Delisting

Electronics For Imaging disclosed that it has been notified of a possible delisting from the Nasdaq Stock Market for not filing its March 31 quarterly report on time.EFI, which makes products and parts for printer management, had earlier warned of the filing delay and a pending restatement after ...

By Stephen Taub • May 23, 2007

Wells Notice for Ingram Micro on McAfee Deals

Ingram Micro has received a Wells notice from the Securities and Exchange Commission regarding transactions between the computer products distributor and McAfee.According to Ingram, the SEC alleged that the company failed to maintain adequate books and records, which the company believes are conc...

By Stephen Taub • May 21, 2007

Five Years Out of Work

When David Welch became the first person to win protection under the whistle-blower provision of the Sarbanes-Oxley Act back in 2002, the former CFO of Cardinal Bancshares figured he would be back at work shortly.“I thought everything would be fine when I filed the complaint,” he recalls. “I just...

By Stephen Taub • May 18, 2007

PwC: Internal Auditors May Be Missing Risks

The major accounting scandals earlier this decade and the Sarbanes-Oxley Act placed a renewed focus on risk management at publicly traded companies. But assessing risk is one task that has fallen by the wayside at some companies. According to a PricewaterhouseCoopers report, 18 percent of compani...

By Sarah Johnson • May 17, 2007

New Sheriff in Town

Warning to Corporate America: Don’t expect a docile New York AG now that Eliot Spitzer is in the governor’s mansion.Andrew M. Cuomo, who took over as the state’s attorney general at the beginning of this year, said his office has filed suit in Albany County Supreme Court accusing computer giant D...

By Stephen Taub • May 16, 2007

Study: Costs of 404 Drop 23 Percent

The cost of compliance with Section 404 of the Sarbanes-Oxley Act continues to decline, according to a new study by Financial Executives International.FEI surveyed 172 accelerated filers — companies with a market capitalization above $75 million — and found that the average cost in 2006 was $2.9 ...

By Stephen Taub • May 16, 2007

Herpes-Drug Maker CFO Expects Wells Notice

U.S. regulators are turning up the heat on Biovail. The Canadian specialty drug company announced Wednesday that CFO Kenneth Howling and chairman Eugene Melnyk and have been told to expect Wells notices from the Securities and Exchange Commission.The SEC staff is in the process of providing a sim...

By Stephen Taub • May 16, 2007