Sarbox May Extend to Child Pornography

A Connecticut lawyer has become enmeshed in the snares of the Sarbanes-Oxley Act, even though his alleged crime has nothing to do with such core missions of the law as stamping out securities fraud, ensuring auditor independence, or boosting investor confidence. Rather, his alleged violation was ...

By Sarah Johnson • March 16, 2007

Not All Filers Are Accelerated Equal

Large accelerated filers — U.S. companies with a market capitalization of at least $700 million — have struggled to meet a new Securities and Exchange Commission filing deadline, according to institutional research firm Glass, Lewis.Beginning this year, these companies must file their annual repo...

By Stephen Taub and Dave Cook • March 16, 2007

Regulation Costing Attorneys More Time

Corporate lawyers at U.S. and international firms have been burning more midnight oil on regulatory issues in the past three years as the number of investigations — both internal and regulatory — has risen. According to a survey of company lawyers by law firm Fulbright & Jaworski, those at th...

By Helen Shaw • March 16, 2007

Cisco Outsmarted of $1 Million, Say Feds

Four former employees of a networking-equipment reseller have been charged with engaging in a scheme that defrauded Cisco Systems out of more than $1 million, reports the Associated Press.According to the U.S. Attorney’s Office for the Northern District of California, during 2001 and 2002 the def...

By Stephen Taub and Dave Cook • March 16, 2007

”Real Deal” Was Going in Circles: SEC

The Securities and Exchange Commission has settled charges against three people for an alleged financial fraud regarding “circular” real estate sales.The three — Robert A. Ness Jr., former controller of Spokane-based Metropolitan Mortgage & Securities; a former vice president, Thomas R. Maste...

By Stephen Taub and Dave Cook • March 16, 2007

Time Warner, Calpers in $118M Settlement

The California Public Employees’ Retirement System announced that Time Warner has agreed to pay $117.7 million to settle a securities lawsuit regarding its former AOL unit.After opting out of a federal class action, Calpers filed its own lawsuit in 2003 against Time Warner, several current and fo...

By Stephen Taub and Dave Cook • March 15, 2007

Ex-Peregrine CEO Has Wings Clipped

Stephen P. Gardner, former chairman and chief executive officer of Peregrine Systems, has pleaded guilty to three criminal charges regarding a massive fraud that forced the company to file for bankruptcy, according to published reported.Gardner was among seven former executives and consultants of...

By Stephen Taub • March 14, 2007

Dunn Deal: HP Spy Charges Dropped

A California judge dropped criminal charges against former Hewlett-Packard chairwoman Patricia Dunn stemming from the company’s boardroom spying scandal, according to published reports.“This is a vindication of Patty Dunn in every sense of the word,” her lawyer, James Brosnahan, told the Associat...

By Stephen Taub • March 14, 2007

SEC, Banc of America Securities Settle

In the latest of a number of Securities and Exchange Commission insider-trading actions, the SEC settled an enforcement action with Banc of America Securities in which BAS will pay $26 million in disgorgement and penalties. The commission had charged that the company with not safeguarding the re...

By Sarah Johnson • March 14, 2007

CFO Departs, Hedge Fund Protests

Ceridian’s chief financial officer has resigned, and an activist hedge fund with a stake in the company is none too happy.On Monday morning, the business services company announced that its CFO since 2005, Douglas C. Neve, resigned as of March 8. “Doug has been a valued member of the senior manag...

By Stephen Taub • March 14, 2007

Hints, Tips, and Handcuffs

A whispered aside in a bar, an indiscreet remark in an e-mail — this is the stuff on which inside trading thrives. But Blue Bottle, a Hong Kong firm fingered on February 26th by America’s markets watchdog, the Securities and Exchange Commission (SEC), showed more chutzpah. It netted $2.7m trading...

By Economist Staff • March 13, 2007

TXU Accused of ”Market Power Abuse”

Texas regulators have accused TXU of manipulating the Texas electric market, costing consumers $70 million and generating $20 million in extra profits for the state’s largest supplier of electric power, reported the Associated Press.A report prepared by Potomac Economics and released by the state...

By Stephen Taub • March 13, 2007

New Scrutiny for New Century

New Century Financial disclosed Tuesday that it is the target of criminal and civil investigations.The New York Stock Exchange subsequently announced that it had determined that New Century’s common stock should be delisted, effective immediately. The company expects to be listed on the Pink Shee...

By Stephen Taub • March 13, 2007

Closing the Books on Andersen and Enron

Enron investors are due to receive $72.5 million from its former auditor, Arthur Andersen, reported Bloomberg.According to the wire service, U.S. District Judge Melinda Harmon approved the class-action settlement — agreed to in 2005 but first made public only last November — after plaintiffs’ att...

By Dave Cook and Stephen Taub • March 12, 2007

Car Auctioneer, Shareholders Strike Deal

Adesa, which conducts wholesale vehicle auctions and related services, announced that it has settled a shareholder class action lawsuit regarding its proposed merger with a number of private equity and hedge funds.Last December, Adesa agreed to a merger with KAR Acquisition, an indirect subsidiar...

By Stephen Taub • March 12, 2007

Waiving Secrecy Goodbye

Does sharing a document with your auditor destroy your right to keep that document confidential?Buried in a rancorous court fight that pits an institutional investor against a defense contractor and its auditor is the issue of whether companies can successfully use the “work product doctrine” to ...

By Marie Leone • March 9, 2007

Time Warner, Ohio Funds Settle for $144M

Ohio Attorney General Marc Dann announced Thursday that Time Warner has agreed to pay $144 million to settle charges regarding its former AOL unit, brought on behalf of the state’s Bureau of Workers’ Compensation and five pension funds.They had alleged that AOL inflated its stock price before mer...

By Stephen Taub • March 8, 2007

Settlement in Monsanto Bribery Case

A former employee of agribusiness giant Monsanto has settled charges brought by the Securities and Exchange Commission for the bribery of an Indonesian official.The SEC complaint alleged that in 2002, Charles Martin, once Monsanto’s government affairs director for Asia, violated the Foreign Corru...

By Dave Cook and Stephen Taub • March 7, 2007

Unraveled: Black’s Company Pleads Guilty

Ravelston, Conrad Black’s Toronto-based holding company, has pleaded guilty in U.S. District court in Chicago to a single count of fraud, according to published accounts.The company had been charged for its alleged role in a scheme that cost shareholders of Hollinger International — where Black w...

By Stephen Taub and Dave Cook • March 6, 2007

WorldCom Ex-CEO: No One Else to Call On

Without comment or recorded dissent, the Supreme Court on Monday turned down the appeal of Bernard Ebbers, convicted in 2005 for his role in the WorldCom accounting scandal.Ebbers, 65, had sought a review of his conviction on fraud and conspiracy charges. Last September, he reported to a federal ...

By Stephen Taub • March 5, 2007

Phoning It In

What’s the best way for an employee to blow the whistle on fraud or related infractions? The most popular way seems to be via hotlines or similar reporting tools. According to a joint report from the CSO Executive Council, an organization of corporate and government security executives, and The N...

By John McPartlin • Feb. 27, 2007

Study: Company Patent Suits Dropping

Corporations have started going to court less often to protect their intellectual-property assets—partly because they’re getting less money when they win, according to a new study of trademark damages by PricewaterhouseCoopers.In 2005, the number of patent cases filed fell to 2,720, the first dec...

By David Katz • Feb. 27, 2007

SEC Drops Charge Against Former CFO

A former chief financial officer of Halliburton Co. is in the clear from a legal perspective, after the Securities and Exchange Commission dropped a charge against him related to the company’s change in accounting policy during the years that Vice President Dick Cheney served as chief executive o...

By Stephen Taub • Feb. 26, 2007

Senators Press SEC, PCAOB for 404 Delay

With overall corporate spending on Sarbanes-Oxley compliance apparently leveling off, two prominent U.S. Senators are zeroing in on easing Sarbox internal-controls on the smallest public companies.In a letter to Securities and Exchange Commission Chairman Christopher Cox and Public Company Accoun...

By David Katz • Feb. 26, 2007

HealthSouth CFO Avoids Prison, Again

Former HealthSouth chief financial officer Malcolm “Tadd” McVay was sentenced Thursday to five years’ probation, the same sentence an appeals court threw out last year.McVay — one of five former CFOs charged in connection with the company’s $2.7 billion accounting scandal — served as CFO for only...

By Dave Cook • Feb. 23, 2007