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

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

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

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

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

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

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

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

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

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

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

Mass. Digs Up $59 Million from AIG in Missing Funds

After unearthing missing funds that workers’ compensation insurer AIG had failed to pay the state, Massachusetts Attorney General Martha Coakley has reached a settlement with the insurer under which it will pay $58.5 million related the Big Dig project, according to a statement released by the at...

By Laura DeMars • May 15, 2007

Ace Ltd. to Pay Out $49M for Bid Rigging

Ace Ltd. has agreed to pay an added $9 million to Pennsylvania to settle charges of bid rigging and other improper underwriting practices, according to state attorney general Tom Corbett.Under a previous agreement, the Bermuda-based Property/Casualty insurer will also pay back policyholders $40 m...

By Stephen Taub • May 15, 2007

Tyco Settles Suit for Nearly $3 Billion

Tyco International will pay $2.975 billion to settle a class-action lawsuit that resolves all shareholder claims for alleged securities and accounting fraud during the regime of former chief executive officer Dennis Kozlowski.Shareholders will also receive 50 percent of any recovery from Tyco’s s...

By Stephen Taub • May 15, 2007

Penthouse Retouched Profits, Says SEC

The Securities and Exchange Commission has settled charges with publishing company Penthouse International and two individuals regarding allegations of accounting fraud and filing a false report.The SEC allegations against the company, former executive vice president and director Charles Samel, a...

By Stephen Taub • May 11, 2007

First Prison Term in Backdating Scandal

William F. Sorin, former general counsel of Comverse Technology, on Thursday became the first executive involved in the stock-option backdating scandal to be sentenced to prison, according to published accounts.“I have no excuse for my conduct,” said Sorin at his hearing on Thursday, according to...

By Stephen Taub • May 11, 2007

Frank Question: Is the SEC Going Soft?

Facing growing criticism from their congressional overseer, the Securities and Exchange Commission commissioners may have to defend their policies during a Financial Services Committee hearing in late June. Since he took over the chairmanship of the committee, Rep. Barney Frank (D-Mass.) has been...

By Sarah Johnson • May 10, 2007

Fewer Firms Report Material Weaknesses

Sharply fewer companies rated by Moody’s Investors Services reported material weaknesses in their internal controls during 2006, the third year of reporting under Section 404 of the Sarbanes-Oxley Act, the rating service said. Moody’s said that 55 companies among those that it rates reported mate...

By Roy Harris • May 10, 2007

Novellus Investors Drop Backdating Suit

Plaintiffs in a shareholder derivative lawsuit alleging the improper dating of stock options grants at Novellus Systems have decided to drop their case. Last week, investors submitted a voluntary dismissal notice to the U.S. District Court for the Northern District of California to close the book...

By Sarah Johnson • May 10, 2007