A Surge in Credit-Rating Firms?

Seven credit-rating firms previously identified as nationally recognized statistical rating organizations (NRSRO) have formally registered with the Securities and Exchange Commission to comply with congressional reforms, and at least one more firm is in the process of registering. The registering...

By Alan Rappeport • June 28, 2007

Family Bonding: Adelphia’s Rigases Going to Prison

Former Adelphia Communications CFO Timothy Rigas and his father, Adelphia founder John Rigas, are headed for prison. The men were ordered today to begin their terms on Aug. 13, nearly three years after they were convicted in one of the signature corporate frauds of the new millennium. Father and ...

By Stephen Taub • June 27, 2007

KeyBank Sheds Money-Laundering Edicts

The Comptroller of the Currency has removed an October 2005 consent order against KeyBank National Association requiring the bank to patch up its money-laundering defenses required under the Bank Secrecy Act.Further, the Federal Reserve Bank of Cleveland has ended a Memorandum of Understanding c...

By Stephen Taub • June 27, 2007

SEC’s Cox Tells Congress: Let the Decision Stand

Making a strong case for rule by precedent, Securities and Exchange Commission Chairman Christopher Cox told the House Financial Services Committee that SEC interpretations of laws shouldn’t depend on who’s in charge at any one time. In their vote in favor of a shareholder brief arguing that “sec...

By Sarah Johnson • June 27, 2007

SEC Defends Unanimous Votes to Frank

Testifying on Tuesday before the House Financial Services Committee, the members of the Securities and Exchange Commission defended their habit of continually voting the same way for the past two years. During Christopher Cox’s reign as chairman of the SEC since 2005, critics have questioned his...

By Sarah Johnson • June 26, 2007

Supreme Court Delays Enron Case

The Supreme Court justices have put off hearing a case that could determine whether banks should be held directly liable for helping Enron with its accounting fraud. In the waning days of their 2006 term, the justices have set Regents of the University of California v. Merrill Lynch aside. A some...

By Sarah Johnson • June 26, 2007

Scrushy to Be Sentenced Tuesday

After being acquitted in 2005 on all charges related to the massive accounting fraud at HealthSouth, former CEO Richard Scrushy may be heading to prison after all.Scrushy faces sentencing Tuesday in a separate case in which he and former Alabama governor Don Siegelman were convicted of bribery an...

By Stephen Taub • June 25, 2007

Research in Commotion

If there has been one lasting casualty of the collapse of the dotcom bubble, it has been sell-side research — the securities analysis undertaken by investment banks. Regulators have restricted it and investors have ignored it. RCM, a fund-management group, estimates that research budgets fell by ...

By Economist Staff • June 25, 2007

Cardinal Bancshares Changes CFOs

Cardinal Bankshares Corp., the small Floyd, Va.-based bank holding company that emerged victorious after a long, unsuccessful whistle-blower complaint brought by a former chief financial officer, has named a new CFO.In a regulatory filing, Cardinal said its appointment of Alan Dickerson as vice ...

By Stephen Taub • June 25, 2007

The Numbers in Safety

Even as Congress was preparing to hold hearings on theagency’s effectiveness, the Occupational Safety and Health Administration sentout its annual warning letters to companies with higher-than-average injuryand illness rates. More than 14,000 companies received the letters, each havingreported 5....

By Laura DeMars • June 25, 2007

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

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

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

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

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

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

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

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

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

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