”I Am Absolutely Innocent,” Says Skilling

Examine our Enron archiveIn his first few moments of testimony at his criminal trial, former Enron chief executive officer Jeffrey Skilling summed up his situation. “In some ways, my life is on the line,” he told jurors Monday.As co-defendant Kenneth Lay looked on, Skilling insisted that “I am ab...

By Stephen Taub • April 10, 2006

Compliance Systems Eye the Inbox

“Loose lips sink ships,” a familiar warning to servicepeople and civilians during World War II, counseled Americans against the dangers of careless talk. Similar admonitions apply in Corporate America today, except that the “talk” very often takes place on a company’s E-mail servers, and the “shi...

By Esther Shein • April 10, 2006

CFO Whistle-blower Still in Limbo

The Department of Labor’s Administrative Review Board has affirmed a judge’s order that a bank must rehire a former CFO who was the nation’s first Sarbanes-Oxley whistle-blower, but it doesn’t seem to have settled the matter.In late 2002, David Welch was fired as chief financial officer of Floyd,...

By Alix Stuart and Stephen Taub • April 10, 2006

News Corp. Settles Poison-Pill Suit

A group of international institutional investors and News Corporation have reached a settlement of the investors’ lawsuit demanding that shareholders be allowed to vote on the company’s extension of a poison-pill provision. The deal came just two weeks before a scheduled trial was to have begun i...

By Stephen Taub • April 6, 2006

Lay “Focused on Grand Policy”

Examine our Enron archiveFormer Enron general counsel James Derrick spent his second day on the stand Thursday, helping defense attorneys distance former chief executives Jeffrey Skilling and Kenneth Lay from former CFO Andrew Fastow and the controversial partnerships that he created to help shie...

By Stephen Taub • April 6, 2006

Is Seaboard Back?

The Securities and Exchange Commission dropped two previously announced probes this week, both involving mid-size companies that conducted internal investigations.The moves suggest that the SEC’s so-called Seaboard policy, in which companies can earn leniency by self-reporting misdeeds and cooper...

By Stephen Taub • April 6, 2006

Why Earnings Guidance Can Be Bad for Corporate Health

U.S. companies are of two minds about the wisdom of providing earnings guidance. The majority now do so, viewing the quarterly ritual as a necessary, if sometimes onerous, part of investor relations. The benefits, they hope, are lower share-price volatility and higher valuations. At a minimum, co...

By S.J. Rajan and Tim Koller • April 6, 2006

Defense Tries to Discredit Watkins

Examine our Enron archiveA lawyer who had investigated claims of accounting problems at Enron made by Sherron Watkins reportedly disparaged her testimony today during the trial of Ken Lay and Jeff Skilling. Max Hendrick III, a lawyer with Vinson & Elkins LLP, said many of the famed whistle bl...

By Stephen Taub • April 5, 2006

Small-Company Execs Sound Off on 404

The participant list is still a work in progress. Judging by the comment letters on the Securities and Exchange Commission’s website, however, the SEC’s upcoming Section 404 roundtable will feature a great deal of heated talk about how hard and costly it is for small companies to comply with the ...

By Marie Leone • April 5, 2006

Enron Defense Still Playing Small Ball

Examine our Enron archiveFor a second straight day, attorneys for Kenneth Lay and Jeffrey Skilling called a succession of witnesses to pick away at the prosecution’s case. During much of the morning, the defense — minus Lay attorney Mike Ramsey, who is scheduled for carotid artery surgery on Wedn...

By Stephen Taub • April 4, 2006

Small-business 404 Waiver Unlikely: Cox

Christopher Cox, chairman of the Securities and Exchange Commission, said Monday that small companies should not necessarily expect an exemption from the internal-controls provisions of Sarbanes-Oxley, according to Bloomberg.Speaking to reporters in Washington, D.C. following his presentation to ...

By Stephen Taub • April 4, 2006

Enron Defense Steps Up to the Plate

Examine our Enron archiveAfter a long weekend recess, defense attorneys got things started slowly on Monday as they began their case on behalf of Kenneth Lay and Jeffrey Skilling.They began without Lay’s lead attorney, Mike Ramsey, who was absent following outpatient treatment for a stent that ha...

By Stephen Taub • April 3, 2006

Enron Sets Portland General Free

Examine our Enron archiveThey’re celebrating in Portland. As part of a regular financial distribution to its creditors, Enron today handed out some 27 million shares of Portland General Electric. In doing so, the fallen energy trading giant relinquished control of PGE, making the utility a stand-...

By Stephen Taub and Tim Reason • April 3, 2006

Coming Clean about Bribery

Spurred by the Sarbanes-Oxley Act and the increasing likelihood of being caught bribing foreign officials, managers at increasing numbers of U.S. companies are voluntarily disclosing breaches of the Foreign Corrupt Practices Act, a Department of Justice official says.Since the beginning of March...

By Marie Leone • April 3, 2006

Thinking Inside the Sarbox

There’s little doubt that software vendors see plenty of opportunity in offering products that ease the pain of Sarbanes-Oxley requirements — or that claim to, anyway. A recent Internet search on “Sarbanes-Oxley software” garnered almost 80,000 hits, while a search on the broader “compliance soft...

By Esther Shein • April 1, 2006

Coming Distractions

Like most CFOs, Paul Reilly is not prone to exaggeration. The finance chief at Melville, New York–based Arrow Electronics Inc., Reilly is by nature a pragmatist — a level-headed, by-the-numbers pragmatist. So when he tells you flat out that, “It’s a growing problem; people are not focused on it,”...

By John Goff • April 1, 2006

Social vs. Fiduciary: The Responsibility Debate

An activist shareholder claims executives at Goldman Sachs and General Electric Co. are shirking their fiduciary responsibilities to shareholders by appeasing environmental activists. Free Enterprise Action Fund (FEAF), a year-old mutual fund with $5.7-million under management, submitted sharehol...

By Marie Leone • March 29, 2006

Enron Prosecution Rests

Examine our Enron archiveProsecutors rested their case in the ninth week of the trial of former Enron Corp. executives Kenneth Lay and Jeffrey Skilling.“By authority granted to me, I declare spring break,” Judge Sim Lake told the jury, according to the Houston Chronicle.The defense will begin its...

By Stephen Taub • March 28, 2006

Enron Sideshow: Two Settle Fraud Charges

Examine our Enron archiveTwo former Enron Corp. employees, accountant David T. Leboe and attorney Dale G. Rasmussen, have agreed to settle Securities and Exchange Commission allegations that they manipulated earnings.The charges were filed in federal court in Houston, where prosecutors are windin...

By Stephen Taub • March 28, 2006

Zurich Settles with Spitzer

Zurich Financial Services agreed to pay $153 million and adopt a series of sweeping reforms to settle charges of bid-rigging and improper “finite reinsurance” transactions brought by New York, Connecticut, and Illinois, according to a joint announcement by New York State Attorney General Eliot Sp...

By Stephen Taub • March 28, 2006

Glisan: Enron Had Sufficient Cash

Examine our Enron archiveDuring continued cross-examination on Monday, defense attorneys threw doubt on the testimony of former Enron Corp. treasurer Ben Glisan, who last week said he warned Kenneth Lay about the company’s failing financial health.During questioning by Lay attorney Bruce Collins,...

By Stephen Taub • March 27, 2006

No End to Finite-risk Troubles

Max Re Capital Ltd. disclosed that its audit and risk management committee has launched a review of the company’s accounting for three finite-risk retrocessional contracts written in 2001 and 2003.The Bermuda-based reinsurer stated that as a result of the investigation, it may need to restate its...

By Stephen Taub • March 27, 2006

Deferring that Day in Court

Last August, when KPMG entered into a deferred prosecution agreement with the Justice Department, representatives of both parties might well have had the specter of Arthur Andersen on their minds.For their part, prosecutors were wary of pursuing a full conviction of the firm for selling fraudulen...

By Helen Shaw • March 24, 2006

Glisan: No Notes from Skilling Meetings

Examine our Enron archiveUnder a sometimes biting cross-examination by defense attorneys Thursday, Enron treasurer Ben Glisan defended his contention that Enron executives Kenneth Lay and Jeffrey Skilling knew about and approved Enron fraudulent reporting schemes, according to trial coverage by t...

By Tim Reason • March 23, 2006

Legal Briefs: Fruit of the Loom Settles

Another scandal from the 1990s has finally been resolved.Two class-action settlements totaling $42 million against Fruit of the Loom Inc. have been approved by a federal judge, according to the Associated Press.The lawsuits had been filed in 1998 and 2000 in U.S. District Court in Bowling Green, ...

By Stephen Taub • March 22, 2006