SEC, Ex-execs of NorthWestern Settle

The Securities and Exchange Commission settled charges against four former officers, including two former finance executives, of NorthWestern Corp. for actions that the SEC says ultimately resulted in the company’s bankruptcy in 2003.The SEC alleged that Merle D. Lewis, NorthWestern’s former chie...

By Stephen Taub • April 26, 2007

Insuring Terror

The cost of terrorism can be a terrible thing to assess. Indeed, even experts astute at calculating risk seem at a loss — both at predicting future attacks and at estimating their price. Insurers, who bear much of the financial burden when catastrophe hits, once again have begun to push the feder...

By Alan Rappeport • April 26, 2007

Ex-Cendant Controller Settles with SEC

The Securities and Exchange Commission settled its fraud case against the ex-controller of Cendant on Wednesday.Anne Pember, formerly controller with CUC International, which merged with HFS Inc. to form Cendant in December 1997, will have to pay $100,000 and is prohibited from serving as an offi...

By Alan Rappeport • April 25, 2007

Comverse to Allow ”Proxy Access”

Comverse Technology announced Wednesday that under a new by-law amendment, major shareholders will now be entitled to nominate potential board members and have those candidates included on the company’s ballot.The announcement of limited “proxy access” came one day after the Securities and Exchan...

By Stephen Taub • April 25, 2007

Options Probes Moving ”Quickly”: Cox

Securities and Exchange Commission chairman Christopher Cox said the regulator will probably wrap up many of its stock-option backdating cases during the next few weeks, according to Reuters.“We are working on procedures to move many of the cases very quickly,” he told the wire service. Reuters a...

By Stephen Taub • April 25, 2007

Familiar Tune: Backdating at Apple

It’s official: Former Apple chief financial officer Fred D. Anderson has agreed to pay more than $3.6 million to settle charges with the Securities and Exchange Commission stemming from his role in the company’s options backdating scandal.The SEC also filed charges against former general counsel ...

By Dave Cook and Stephen Taub • April 24, 2007

Familiar Tune: SEC Alleges Backdating

Former Apple chief financial officer Fred Anderson has agreed to pay $3.5 million to settle Securities and Exchange Commission charges regarding backdated stock option grants, according to published accounts. He will also pay a $150,000 fine to settle SEC charges that he filed false financial rep...

By Stephen Taub • April 24, 2007

Scrushy Settles with SEC for $81 Million

Former HealthSouth founder and chairman Richard Scrushy agreed to pay $81 million to settle fraud charges with the Securities and Exchange Commission stemming from one of the largest accounting restatements in American corporate history.Under the deal, Scrushy also agreed to a permanent bar from ...

By Stephen Taub • April 23, 2007

Hoping D&O Will CYA

Companies are taking more active measures to protect executives frompotential lawsuits by shareholders, as the number of inquiries andpurchases of directors and officers (D&O) insurance is on the rise,according to a new report by the Towers Perrin consultancy.Fallout from scandals during the ...

By Alan Rappeport • April 23, 2007

Fraudster Kicks Enron While It’s Down

A former Enron executive will serve 63 months in prison without parole for submitting false invoices for consulting work — several years after the company filed for bankruptcy.Christian Deeb Rahaim, formerly a senior director of benefits in the company’s human-resources department, was also order...

By Stephen Taub • April 20, 2007

Whistle-blower Lawsuit Gets DoJ Backing

The Department of Justice has joined three whistle-blower lawsuits involving alleged kickbacks to secure technology contracts with government agencies.The suits were originally filed in U.S. District Court in Little Rock, Arkansas, by Norman Rille and Neal Roberts. They allege that three companie...

By Dave Cook and Stephen Taub • April 20, 2007

Nacchio Found Guilty

Joseph Nacchio has been found guilty of engaging in illegal insider trading. In what is probably the last high-profile corporate case since the Enron scandal, the former Qwest Communications International chief executive was convicted on 19 counts of insider trading for selling $52 million worth ...

By Stephen Taub • April 20, 2007

At the Risky End of Finance

Naughty or nice? The question that Father Christmas poses to every child who clamours for a present also haunts the credit-derivatives market. Are these devices a clever way to disperse risk, making the financial system safer, as their enthusiasts claim? Or are they “financial weapons of mass des...

By Economist Staff • April 19, 2007

Compliance Officer Charged as Insider

The Securities and Exchange Commission has filed civil insider trading charges against Kevin J. Heron, the former general counsel, corporate secretary — and chief insider trading compliance officer — of semiconductor outsourcer Amkor Technology. According to the SEC, Heron’s trading put him $290,...

By Dave Cook and Stephen Taub • April 19, 2007

Citi, EDS Reject Pay Proposals

Shareholder proposals on executive compensation fell short on Tuesday at the annual meetings of Citigroup and EDS.At Citi, a “say on pay” proposal by American Federation of State County and Municipal Employees received 43 percent support from voted shares, according to the Associated Press. The n...

By Stephen Taub • April 18, 2007

Ken Lay’s Assets Up for Grabs

Linda Lay, the widow of former Enron chairman Kenneth Lay, is in a tug-of-war with the government over nearly $13 million of her late husband’s assets.Prosecutors maintain that the assets are tied to Enron’s massive fraud. But in a court filing, reported the Associated Press, Linda Lay has assert...

By Stephen Taub • April 18, 2007

Sea Change for Attorney-client Privilege

Patent litigation “can be ruinous if it turns out badly,” observes Alison Tucher, a partner with the law firm of Morrison & Foerster. Understandably, then, a court case that threatens to erode attorney-client privilege in patent lawsuits — and that may turn a 24-year-old legal standard on its...

By John P. Mello Jr. • April 17, 2007

Fill ‘Er Up

Purchasing cards are getting a makeover. Several banks, including PNC and SunTrust, are now peddling so-called unfunded p-cards that streamline vendor payments and disperse the ability to pay bills across the enterprise while providing centralized control over accounts payable.An unfunded p-card,...

By Lori Calabro • April 17, 2007

Backdating Not Sufficient to Prove Fraud

A federal judge in San Francisco has dismissed most of a shareholder derivative lawsuit against Cnet Networks regarding backdated stock-option grants, according to The Recorder.Late last week, reported the legal publication, Judge William Alsup of U.S. District Court for the Northern District of ...

By Dave Cook and Stephen Taub • April 16, 2007

SEC Penalty Policy to Change: Report

The Securities and Exchange Commission may soon assess smaller fines on some companies that settle charges with the regulator, according to The Washington Post.The proposal — which is not yet public and will certainly generate a fair amount of debate — must receive approval from the five SEC comm...

By Stephen Taub • April 13, 2007

Crumpler Appeal Doesn’t Stand Up

Former HealthSouth finance executive Hannibal “Sonny” Crumpler has lost his appeal of the only jury conviction stemming from the company’s $2.7 billion accounting fraud.Once the controller of the company’s outpatient-rehabilitation division, Crumpler later became the finance chief of HealthSouth ...

By Stephen Taub • April 13, 2007

Another Bruise for BlackBerry Maker

Research In Motion disclosed that an informal Securities and Exchange Commission inquiry into the company’s stock-option practices has been elevated to a formal investigation.The Waterloo, Ontario-based company, best known for its BlackBerry device, added that it believes that the focus of the in...

By Stephen Taub • April 12, 2007

Of Coups and Coverage

War, riots, coups, embargoes — the sort of political upheaval that once occupied statesmen, mercenaries and spies is these days also the concern of less swashbuckling figures in the world of finance. A band of corporate-risk officers, export managers and international bankers are looking to insur...

By Economist Staff • April 11, 2007

Dell Warned by Nasdaq over Listing

Dell Inc. said it was informed by the Nasdaq that it is not in compliance with the exchange’s continued listing requirements. The computer giant cited the delayed filing of its annual report for the fiscal year ended February 2, 2007, as the reason for non-compliance with Nasdaq regulations.In la...

By Stephen Taub • April 10, 2007

Kicking the Guidance Habit

When it became fashionable for CFOs to provide investors with quarterly earnings guidance in the mid-1990s, they may not have realized that the practice would become habit forming. By the time finance chiefs grew weary of coming up with predictions every three months—and explaining why their comp...

By Sarah Johnson • April 10, 2007