SEC Opens Probe of a Fake News Release

The Securities and Exchange Commission has launched an investigation into a seemingly bogus press release that led to a rapid surge in a small outsourcing company’s stock price, according to the Associated Press.Early Wednesday, United Business Media’s PR Newswire distributed a news release stati...

By Stephen Taub • Dec. 22, 2006

How Risk-Shifting Affects Earnings

With the Financial Accounting Standards Board looking to tighten risk-transfer rules, risk managers need to be on the alert for how their companies are accounting for insurance policies that may have significant loan provisions.Up until now, FASB zeroed in on insurers and had little to say about ...

By David Katz • Dec. 22, 2006

Ex-Bakery Finance Exec Settles with SEC

The former finance chief of the maker of Twinkies and Wonder bread has settled civil charges with the Securities and Exchange Commission that he overstated earnings due to the way he accounted for workers’ compensation expenses. The company—Interstate Bakeries—also settled the same charges with t...

By Stephen Taub • Dec. 21, 2006

Four Former Enterasys Execs Convicted

Four former executives of Enterasys, including three former finance executives, were convicted by a federal jury on securities fraud and conspiracy charges stemming from a revenue recognition scheme, according to the Associated Press. The jury was unable to reach a verdict on five charges against...

By Stephen Taub • Dec. 20, 2006

CFOs: No Risk of Crisis Looming

Many chief financial officers and managing directors at multinational companies don’t think their companies will experience a major crisis for the next three years. That a good thing. Because many more within that same group don’t believe their companies are prepared to handle a catastrophe.Indee...

By Stephen Taub • Dec. 19, 2006

Guilty Plea in New Enron Scandal

In a case unconnected to the initial fraud that brought down the company, a former member of Enron Corp.’s human resources department pleaded guilty to defrauding the company of about $3 million, according to the Associated Press.Christian Deeb Rahaim, formerly senior director of benefits, admitt...

By Stephen Taub • Dec. 18, 2006

Apple, Dell Delay Filings

Two of the world’s best-known technology companies are delaying the filing of their latest financial reports because of problems with options backdating.Apple Computer says it is unable to file its annual report for the fiscal year ended September 30 because it needs to restate prior financial st...

By Stephen Taub • Dec. 15, 2006

Accountant Gets Death Penalty

A Chinese high court allowed the death penalty to stand for an accountant who was involved in defrauding bank customers out of hundreds of millions of dollars, reported the Associated Press. Earlier this week, accountant Liu Yibing, and Zhou Limin, the former head of the China Construction Bank b...

By Stephen Taub • Dec. 14, 2006

Skilling Ordered to Prison

Former Enron CEO Jeffrey Skilling has been ordered by a federal appellate judge to start his prison sentence immediately, according to the Associated Press. Skilling’s request to remain free during his appeal was turned down on Tuesday by Judge Patrick Higginbotham of the 5th U.S. Circuit Court o...

By Marie Leone • Dec. 13, 2006

McNulty Revises Thompson Memo

U.S. deputy attorney general Paul McNulty has revised the controversial guidelines that federal prosecutors have been using for more than three years to measure the cooperativeness of companies whose employees are accused of corporate crime. These provisions, collectively called the McNulty Memor...

By Sarah Johnson • Dec. 12, 2006

Skilling’s Prison Term is Delayed

Jeffrey Skilling will remain outside of prison for a little bit longer. The 5th U.S. Circuit Court of Appeals agreed to delay his report to prison so that the court can have more time to consider a request for bail while the former Enron chief executive officer appeals his conviction, according t...

By Stephen Taub • Dec. 12, 2006

Former Ahold CFO Avoids Prison

The former chief financial officer of Royal Ahold NV’s U.S. Foodservice Inc. unit will avoid spending time in prison for his role in the Dutch food giant’s massive fraud in 2003. Michael Resnick was sentenced to six months of home detention and three years’ probation, according to the Associated ...

By Stephen Taub • Dec. 12, 2006

Shrinking World

Are European shareholders closing the gap in terms of legal redress against wayward management, or is the US firming up its status as a kind of “global court” for class actions? For Ralph Stone, partner in Shalov, Stone & Bonner, the scales are tipping towards Europe. “There is an erosion of ...

By Tony McAuley and Jason Sumner • Dec. 12, 2006

Down to the Wire: Thompson Memo Revised?

Sen. Arlen Specter has made good on his threat to introduce legislation that aims to protect attorney-client confidentiality in corporate criminal cases. The measure, the Attorney-Client Privilege Protection Act, is a last-minute effort by the Republican lawmaker from Pennsylvania to get the issu...

By Sarah Johnson • Dec. 8, 2006

FASB Seeks New Derivatives Disclosures

The Financial Accounting Standards Board wants companies to disclose more details about the effects of derivatives and hedging on their financial statements.Under a proposal issued Friday, FASB would require companies to discuss their objectives and strategies for using derivatives in terms of un...

By David Katz • Dec. 8, 2006

Wal-Mart Settles Life Insurance Lawsuit

Wal-Mart Stores has settled a $5.1 million class-action lawsuit involving the proceeds of corporate-owned life insurance policies that plaintiffs claimed the retailer wrongfully received after the employees died, according to the Associated Press.The estates of 73 former Wal-Mart Stores employees...

By Stephen Taub • Dec. 5, 2006

Pequot Case: ‘The Plot Grows Thicker’

“The plot grows thicker,” declared Senate Judiciary Committee Chairman Arlen Specter at the conclusion of a Tuesday hearing aimed at finding out if the Securities and Exchange Commission mishandled an investigation into Pequot Capital Management and later violated the rights of a whistleblower.“I...

By Marie Leone • Dec. 5, 2006

Senate Hearing to Probe SEC-Pequot Case

Eric Ribelin, a branch chief in the Securities and Exchange Commission’s Office of Market Surveillance, will testify before a Senate Committee today regarding how the regulator handled its investigation of hedge fund Pequot Capital Management. Rebelin is the second SEC official to raise questions...

By Marie Leone • Dec. 5, 2006

Wal-Mart Whistle-blower Drops Lawsuit

A Wal-Mart whistle-blower has abruptly dropped a lawsuit against the world’s largest retailer. Jared Bowen, who claimed he was fired when he called attention to a fraud committed by former number-two Wal-Mart executive Tom Coughlin, decided to drop claims filed in state court that the retailer de...

By Stephen Taub • Dec. 1, 2006

HP CFO, Execs Accused of Insider Trading

The chief financial officer of Hewlett-Packard is one of five individuals accused of insider trading in an amended complaint filed earlier this week, according to The Houston Chronicle. The suit accuses CFO Bob Wayman, CEO Mark Hurd, and directors Lucille Salhany and Lawrence Babbio of participat...

By Stephen Taub • Dec. 1, 2006

Should You Buy D&O ASAP?

Just three years ago, directors’and officers’ (D&O) insurance rateswere so high that Ron Foster, thenCFO for troubled fiber-optics giant JDSUniphase, threatened to set up a self-insuredfacility with other companies ratherthan pay the prices insurance companieswere demanding.That approach woul...

By Alix Stuart • Dec. 1, 2006

The 5 Cent Empire

The long buses start rolling into the parking lot at the Grand Casino Mille Lacs long before the morning mist has lifted from the marshlands and maple trees. A steady line of white-haired warriors, armed with supersized plastic cups and beaded change purses, pile out of the buses and head straigh...

By John Goff • Dec. 1, 2006

Wells Fargo, Ameriprise Require Majority Votes

Wells Fargo and Ameriprise Financial are the latest to join the growing roster of companies—including some of the largest in the world—that are requiring their boards of directors to receive a majority of the votes cast by shareholders in uncontested director elections.Both companies said they ex...

By Stephen Taub • Nov. 30, 2006

Capital Markets Report Urges 404 Fixes

The Committee on Capital Markets Regulation today officially released its first report, which calls for a fix of section 404 of the Sarbanes-Oxley Act, the internal controls provision, before it is required for smaller companies.That was just one of the recommendations in the 135-page report by t...

By Helen Shaw • Nov. 30, 2006

Taub to Leave SEC

In a big blow to the Securities and Exchange Commission, Scott A. Taub, deputy chief accountant in the Office of the Chief Accountant, will leave the regulator later this year.Taub is credited with playing a key role in the Commission’s implementation of the accounting reforms under the Sarbanes-...

By Stephen Taub • Nov. 29, 2006