Second Mistrial Declared in Cendant Case

For the second time in 13 months, the proceedings against former Cendant Corp. chairman Walter Forbes ended in a mistrial after jurors could not come up with a unanimous verdict after 27 days of deliberations, reported Bloomberg. Forbes faces federal charges that he led the largest accounting fra...

By Stephen Taub • Feb. 9, 2006

AIG Agrees to $1.6 Billion Settlement

As widely expected, American International Group (AIG) has agreed to pay more than $1.6 billion to settle charges of fraud, bid-rigging, and improper accounting.The agreement was announced simultaneously by the New York State Attorney General, the New York Insurance Department, the Securities and...

By Stephen Taub • Feb. 9, 2006

CFOs Seek Sarbox Triage

Since its enactment in 2002, the Sarbanes-Oxley Act has been impressing observers with its sweep. From banning executive loans and auditor conflicts of interest, to setting up financial sign-offs by top executives, to governing audit committees and whistle-blowers, Sarbox cuts a wide swath throug...

By David Katz • Feb. 9, 2006

Property Insurance’s Uneven Price Blip

Ever since Hurricane Andrew struck Florida in 1992, Scott Clark, the risk and benefits officer of the Miami-Dade County Public Schools, has found it tough to buy enough property insurance to cover the system’s physical assets.After that storm, which caused the schools a $96 million loss, Clark st...

By David Katz • Feb. 9, 2006

What to Do When the Lights Go Out

The California brownouts of 2000, the August 2003 blackout in the Northeastern United States and central Canada, and Hurricane Katrina have shown how risky long-lasting electrical power interruptions can be.Prompted by such awareness — not to mention the heightened reporting pressures under Sarba...

By Helen Shaw • Feb. 9, 2006

Enron Defense Goes to the Videotape

Examine our Enron archiveIt was matinee day at the trial of former Enron Corp. executives Kenneth Lay and Jeffrey Skilling.Daniel Petrocelli, the lead attorney representing Skilling, devoted a big part of the day to playing audiotapes of analyst conference calls as well as a videotape of an emplo...

By Stephen Taub • Feb. 8, 2006

Conservative Group Challenges Sarbox

A free-market advocacy group has filed a lawsuit that challenges the legal authority of the Public Company Accounting Oversight Board to police the accounting profession.The Free Enterprise Fund asserted in a press release that the Sarbanes-Oxley Act of 2002 — the landmark legislation that create...

By Stephen Taub • Feb. 8, 2006

Striking a Balance on the Build-Out

Thanks to a resurgence in mergers and acquisitions, 2005 was a very good year for Lane, Berry & Co. So good, in fact, that the small, scrappy investment-banking firm now faces one of the biggest challenges since its founding four years ago. Lane, Berry is racing to expand by adding 30,000 squ...

By P.B. Gray • Feb. 8, 2006

Defense Keeps Pressure on Enron’s Koenig

Examine our Enron archiveOn Tuesday, at the trial of former Enron executives Kenneth Lay and Jeffrey Skilling, defense lawyer Daniel Petrocelli resumed his cross-examination of former head of investor relations Mark Koenig, according to the Houston Chronicle.Petrocelli, the lead attorney for Skil...

By Dave Cook and Stephen Taub • Feb. 7, 2006

Record High for Class-Action Settlements

Last year was a record-breaker for securities class-action settlements, according to Cornerstone Research, which found that companies paid $9.6 billion to shareholders.Even excluding the $6.1 billion agreement by WorldCom (as well as the $7.1 billion settlement by Enron that has yet to be finaliz...

By Stephen Taub • Feb. 7, 2006

Oil Companies, SEC Differ on Metrics

When an energy company measures its “inventory,” it’s more than a simple exercise in counting.Indeed, the Securities and Exchange Commission requires these businesses to abide by disclosure rules that some consider outdated and arbitrary — and, more significantly, that understate their reserves —...

By Stephen Taub • Feb. 7, 2006

Enron’s Koenig under Cross-examination

Examine our Enron archiveDaniel Petrocelli, the attorney for former Enron chief executive officer Jeffrey Skilling, on Monday began his cross-examination of Mark Koenig, the company’s onetime head of investor relations, by challenging Koenig’s credibility.“You’re still in a mode of trying to prot...

By Stephen Taub • Feb. 6, 2006

Former CFO Seeks Shorter Sentence

While the individuals involved in the Enron trial take a Friday respite (the court is in session from Monday through Thursday), other corporate cases continue. For example, former HealthSouth chief financial officer William Owens filed a request to get his five-year prison sentence cut in half.Ow...

By Stephen Taub • Feb. 3, 2006

Enron Settles with Lehman

Examine our Enron archive.Lehman Holdings has agreed to pay Enron Corp. $69.9 million to settle charges that the investment bank improperly received certain payments from Enron before the energy company went bankrupt, according to Reuters.Under the deal, Lehman agreed to permanently withdraw its ...

By Stephen Taub • Feb. 3, 2006

Keeping Compensation under the Covers

How far should a business go to protect its compensation information? For The Capital Group Cos., a holding company for asset-management firms including the American Funds, the distance extends all the way to divorce court.The Los Angeles–based firm recently sought and won an order to seal practi...

By Alix Stuart • Feb. 3, 2006

The Best Defense

Last year, former McKesson Corp. CFO Richard Hawkins faced criminal charges after a $20 million accounting error was discovered at HBO & Co., a subsidiary McKesson had acquired in 1999. Together, the charges, including securities fraud and conspiracy, carried a maximum sentence of 25 years in...

By Kate O'Sullivan • Feb. 3, 2006

Former Enron IR Exec Details More Fraud

Examine our Enron archiveThe former head of Enron’s investor relations (IR) department testified Thursday that one-time top executives Kenneth Lay and Jeffrey Skilling hid problems from investors related to company’s broadband operations and retail-energy units to keep the stock aloft, according ...

By Stephen Taub • Feb. 2, 2006

DOJ, SEC Charge Five in Gen Re Case

The former chief financial officer, and two other former top executives of Berkshire Hathaway Inc.’s General Re subsidiary, and a one-time American International Group Inc. official, were indicted in Virginia Wednesday for their roles in a reinsurance transaction five years ago, according to The ...

By Stephen Taub • Feb. 2, 2006

Former Enron IR Exec: Earnings Fudged

Examine our Enron archiveIn the first day of testimony in U.S District Court in Houston, Enron Corp.’s onetime head of investor relations made it very clear that former top executives Kenneth Lay and Jeffrey Skilling were clearly in charge, well aware of the company’s financial problems, and did ...

By Stephen Taub • Feb. 1, 2006

SEC Proposes Executive-loan Disclosure

Within its proposed new rules on disclosure of executive compensation, the Securities and Exchange Commission has included a requirement that may address an issue which could have played a role in WorldCom’s bankruptcy.The requirement would require a footnote disclosure of the number of shares pl...

By Stephen Taub • Feb. 1, 2006

Penalty Box

By SEC standards, it was an odd sort of press release.On January 4, the Securities and Exchange Commission issued a statement regarding actions against McAfee Inc. and Applix Inc. The commission reported that the suits had been settled, and that in McAfee’s case, the company would pay a civil fin...

By Alix Stuart • Feb. 1, 2006

At Enron Trial: Let the Charges Begin

Examine our Enron archiveU.S. Justice Department lawyer John C. Hueston told jurors that the case against former Enron Corp. Chairman Kenneth Lay and former Chief Executive Jeffrey Skilling is a simple one. “It’s not about accounting. It’s about lies and choices,” he said, according to Bloomberg....

By Stephen Taub • Jan. 31, 2006

Ebbers Has Reason for Hope

Bernard J. Ebbers, the convicted former WorldCom Inc. chief executive, has good reason to believe his 25-year sentence for committing fraud may be reduced.The three judges hearing his appeal on Monday questioned some of the prosecution’s tactics and clearly indicated that they thought the sentenc...

By Stephen Taub • Jan. 31, 2006

Enron Jury Chosen in One Day

Examine our Enron archiveU.S. District Judge Sim Lake has kept his word. Opening arguments in the case against former Enron Corp. executives Kenneth Lay and Jeffrey Skilling will get under way on Tuesday after 16 jurors, including 4 alternates, were chosen on the first day of trial.Earlier that m...

By Stephen Taub • Jan. 30, 2006

D&O Insurance Prices Soften, Survey Says

Although legal actions against corporate directors and officers have mounted in the past two years, the market for D&O liability coverage has continued to soften, according to a recent survey.Indeed, claim frequency surged 30 percent from 2004 to 2005 and claim susceptibility increased 6 perc...

By Stephen Taub • Jan. 27, 2006