Judge Certifies NovaStar Class Action

A federal judge has certified a lawsuit against NovaStar Financial as a class action, reported The Kansas City Business Journal.Filed in April 2004 on behalf of shareholders by Milberg Weiss Bershad Hynes & Lerach, the class action reportedly claims the Kansas City, Missouri-based subprime le...

By Stephen Taub • Feb. 9, 2007

Working Group Eyes ”Say on Pay”

A number of major companies and activist investors have formed a working group to determine the feasibility of giving shareholders an advisory vote on executive compensation, reported the Associated Press.The group, which will first meet on Friday at the Manhattan offices of investment firm TIAA-...

By Stephen Taub • Feb. 8, 2007

Time Warner, Calstrs Settle for $105M

The California State Teachers’ Retirement System (Calstrs) announced Wednesday that it settled a securities fraud lawsuit against Time Warner, as well its accountants, banks, and several former executives, for $105 million.The lawsuit charged that the media giant’s AOL unit artificially inflated ...

By Stephen Taub and Dave Cook • Feb. 8, 2007

Buy American (Unless You’re Foreign)

Fear that foreign ownership of U.S. companies might undermine national security is hurting investment in this country, a new report says.The report, released January 25 by the National Foundation for American Policy (NFAP), says that regulatory reviews of foreign investments in U.S. firms have in...

By Meghan D. Brady • Feb. 7, 2007

What Keeps Bankers Awake at Night?

When the great, the good and the media assembled in Davos for the World Economic Forum in January, one topic dominated the financial agenda — risk. That ought to be a good sign. For it is when those in charge are feeling complacent that disaster is most likely to happen. Investors also seem nervo...

By Economist Staff • Feb. 7, 2007

Allied Capital: Son of HP?

It looks like Hewlett-Packard was not the only company caught snooping into the phone records of people it was investigating. Allied Capital Corp. said that in late December 2006, it received a subpoena from the United States Attorney’s Office for the District of Columbia requesting, among other ...

By Marie Leone • Feb. 6, 2007

SEC Opens Probe of Quality Systems

Quality Systems, which makes software for medical records, disclosed that the Securities and Exchange Commission has launched an investigation of trading activity in the its securities.The company added that the SEC is also seeking documents and records concerning Paul Holt, chief financial offic...

By Stephen Taub • Feb. 6, 2007

Bush Puts SEC Budget on a Diet

President Bush is asking Congress for a 3 percent budget increase for the Securities and Exchange Commission as part of his $2.9 trillion government funding plan for fiscal year 2008. The increase brings the SEC budget request to $905 million, slightly higher than the 2007 continuing resolution ...

By Marie Leone • Feb. 6, 2007

SEC Names Kroeker to Accounting Post

The Securities and Exchange Commission has named James L. Kroeker as deputy chief accountant for accounting in the Commission’s Office of the Chief Accountant.Kroeker will be responsible for resolution of accounting issues, rulemaking projects, and oversight of standard-setting efforts for privat...

By Stephen Taub • Feb. 5, 2007

Investors Sue Dell over Alleged Kickback

Investors are accusing Dell Inc. of an accounting kickback scheme involving chipmaker Intel Corp., according to a report in The Wall Street Journal. In a lawsuit filed on Wednesday, investors charge that Dell is being paid as much as $1 billion annually by Intel to assure that Dell uses only Inte...

By Marie Leone • Feb. 2, 2007

Investigation Dilemma: Sing or Keep Mum?

If your company — like so many these days — is conducting an internal investigation, beware. Your interrogators may work for the same company you do, but they’re essentially government deputies, legal experts say.In 2004, executives of CA (previously known as Computer Associates), including forme...

By Helen Shaw • Feb. 2, 2007

Qwest Pays $45M to Settle with Calstrs

Qwest Communications has agreed to pay $45 million, and former chief executive officer Joseph Nacchio, $1.5 million, to settle a lawsuit by the California State Teachers’ Retirement System (Calstrs).The nation’s second-largest pension fund estimated that it lost $150 million, reported the Associa...

By Stephen Taub • Feb. 1, 2007

More Backdating Suits Coming, Says Cox

Securities and Exchange Commission chairman Christopher Cox sent a stark warning on Wednesday to companies that have engaged in improper timing of stock option grants.Speaking to reporters, Cox said that the commission is vigorously proceeding with probes at more than 100 public companies and tha...

By Stephen Taub • Feb. 1, 2007

Sarbox on Ice?

Although it’s not even five years old, there’s no question that the Public Company Accounting Oversight Board has seen better days.Currently the target of a lawsuit that threatens its existence, the PCAOB has also been criticized by its boss, the Securities and Exchange Commission, for burdening ...

By David Katz • Feb. 1, 2007

Bush on ”The State of the Economy”

President Bush said executives’ pay should be linked to their company’s performance and urged board members to better monitor executive compensation, but he expressed opposition to government efforts that would give shareholders more say in the matter.Bush also called for certain changes regardin...

By Stephen Taub • Jan. 31, 2007

CNet, Krispy Kreme Current on Filings

Companies that delayed regulatory filings after backdated stock options grants are slowing coming into compliance.The two latest companies to become current in their filings with the Securities and Exchange Commission: CNet Networks and Krispy Kreme Doughnuts.Online media company CNet, which disc...

By Stephen Taub • Jan. 30, 2007

Top Ten Signs the Pendulum Has Swung

One after another, the stars are lining up. Both the Securities and Exchange Commission and the Public Company Accounting Oversight Board beat retreats from bright-line strictures on internal controls. Treasury Secretary Hank Paulson sets up a kitchen cabinet of deregulators in hopes of preventi...

By David Katz • Jan. 30, 2007

Inflection Point

There is no denying that hedge funds are the black holes of the investment galaxy. With some 9,000 funds pulling in $1.2 trillion in investments while offering almost no transparency, they have raised the ire of CFOs and the eyebrows of regulators.The Securities and Exchange Commission, which was...

By Lori Calabro • Jan. 30, 2007

Institutional Investors Eye “Say on Pay”

A group of institutional investors have filed a resolution with 44 U.S. corporations to win the right for shareholders to submit an advisory vote on executive compensation packages.The resolution, informally dubbed “Say on Pay,” is literally that, since it would not be binding on the companies.“W...

By Stephen Taub • Jan. 29, 2007

Former CA CFO Gets Light Sentence

The former chief financial officer of CA got a relatively light sentence for playing what a federal judge called a key role in the software company’s $2.2 billion accounting fraud. U.S. District Judge I. Leo Glasser sentenced Ira Zar to seven months in prison and seven months of home detention, c...

By Stephen Taub • Jan. 29, 2007

Ex-AquaCell CFO Sentenced for IPO Scheme

The former chief financial officer of AquaCell Technologies Inc. was sentenced to six months home detention and ordered to pay a $30,000 fine for lying to auditors during the company’s initial public offering, according to the Associated Press.In October, Gary Wolff pleaded guilty to one count of...

By Stephen Taub • Jan. 29, 2007

Green America: Waking Up and Catching Up

When Jim Webb, the new Democratic senator from Virginia, replied to George Bush’s state-of-the-union message, he could bear to endorse only one of the president’s proposals. This was the idea of cutting America’s petrol (gasoline) consumption by 20% in ten years, by increasing ethanol production ...

By Economist Staff • Jan. 29, 2007

Former Cendant CFO Seeks Probation

The former chief financial officer of Cendant is desperately trying to stay out of prison. Cosmo Corigliano, who is scheduled to be sentenced Tuesday for his role in the largest accounting fraud of the pre-Enron era, is asking the judge to sentence him to probation, home confinement, and communit...

By Stephen Taub • Jan. 26, 2007

Former NBC Treasurer Arrested

U.S. federal authorities have arrested the former treasurer of NBC Universal, Victor Jung, 34, on charges that he stole over $800,000 from the media conglomerate and used the money for personal gain.Jung, who was indicted on two counts of wire fraud Thursday, could be sentenced to a maximum of 20...

By Helen Shaw • Jan. 25, 2007

Former Enron IR Exec Enters Prison

Mark Koenig, the ex-chief of investor relations at Enron, began serving an 18-month prison term on Wednesday for helping top executives mislead Wall Street about the company’s financial condition, according to the Houston Chronicle.Koenig, who began serving the sentence in Three Rivers federal p...

By Stephen Taub • Jan. 25, 2007