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

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

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

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

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

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

Houston, We Have a Trial

The trial of former Enron Corp. executives Kenneth Lay and Jeffrey Skilling will stay put, in Houston, after U.S. District Judge Sim Lake denied a defense motion for a change of venue, according to the Houston Chronicle.Skilling faces 35 counts of fraud, conspiracy, insider trading, and lying to ...

By Stephen Taub • Jan. 24, 2006

Court Rules in Wal-Mart Unionizing Case

A U.S. appeals court has ruled that a district court can decide a lawsuit brought by Wal-Mart workers charging that the company unfairly threatened to deny benefits to employees who unionize, according to the Associated Press.Central to the case is a “union exclusion clause” that Wal-Mart had in ...

By Stephen Taub • Jan. 20, 2006

Proxy Battles Heating Up

The 2006 proxy season opened with a bang. On January 10, a group of General Electric Co. investors claimed victory and withdrew a shareholder resolution that they had doggedly pursued for at least five years.The shareholders, a group of 26 religious organizations called the Tri-State Coalition fo...

By Marie Leone • Jan. 19, 2006

Whistle-blower Shield Stops at Border

The whistle-blower protections of the Sarbanes-Oxley Act do not extend to foreign workers employed by the overseas subsidiaries of U.S. companies, according to a court ruling reported by The National Law Journal.“If the whistle-blower protection provision is given extraterritorial reach in a case...

By Stephen Taub • Jan. 18, 2006

SEC Proposes Changes to Pay Disclosure

As widely expected, on Tuesday the Securities and Exchange Commission unanimously voted to require sweeping changes to the disclosure of executive compensation.The proposals now go through a 60-day comment period, which is expected to generate a tremendous number of responses, followed by possibl...

By Stephen Taub • Jan. 17, 2006

Supreme Court Rules for Wachovia

Wachovia Corp. and other national banks chalked up a critical victory Tuesday when the Supreme Court ruled that lawsuits against them may be heard in federal courts rather than in multiple state courts, according to Dow Jones.The ruling essentially found that national banks are corporate citizens...

By Stephen Taub • Jan. 17, 2006

Finance Combines Opportunity with Necessity

After marching through the first phases of compliance with the Sarbanes-Oxley Act, senior finance executives are turning their attention to making their regulatory compliance both more sustainable and also a driver of better business performance, according to a May 2005 survey of readers of CFO m...

By CFO Editorial Staff • Jan. 17, 2006

SEC Upgrades IBM Disclosure Probe

The Securities and Exchange Commission has raised the status of its probe of IBM’s earnings disclosures from an informal investigation to a formal one, according to the company.In an 8-K filing, Big Blue stated that the commission is looking into the company’s disclosures of its first-quarter 200...

By Stephen Taub • Jan. 13, 2006

Tenet to Settle Medicare-related Suits

Tenet Healthcare Corp. has agreed to pay $215 million to settle two lawsuits accusing the company of fraud. The cases alleged that Tenet and a number of former officers and directors made or were responsible for false and misleading statements concerning Medicare payments and other issues.The agr...

By Stephen Taub • Jan. 12, 2006

Keep It Simple, Prosecutor

Who benefits more from a long, involved jury trial on the complexities of corporate accounting, the prosecution or the defense?Mindful of the results of the results at the trials of Richard Scrushy (acquitted) and Dennis Kozlowski and Mark Swartz (first a contentious mistrial, then convictions), ...

By Stephen Taub • Jan. 11, 2006

Beller to Leave SEC

Alan Beller, the Securities and Exchange Commission’s director of the Division of Corporation Finance and one of the SEC’s most influential individuals outside of the five commissioners, is returning to the private sector.Under the leadership of Beller, the corporate finance division “produced th...

By Stephen Taub • Jan. 11, 2006

Dutch Funds Sue Shell in U.S. Court

In the 1620s, Dutch settlers erected trading posts in and around Newark, New Jersey, to stake a business claim in the New World. Last week, still with an eye toward trading issues, Netherlanders landed in Newark once again. Only this time, they took their concerns to the U.S. District Court of Ne...

By Marie Leone • Jan. 11, 2006

Enron Audiotape Prompts Second Thoughts

Mark Koenig, the former head of investor relations for Enron Corp., now maintains that a false statement he admitted to making was actually made by former chief executive officer Jeffrey Skilling, according to the Houston Chronicle.In August 2004, Koenig pleaded guilty to aiding and abetting secu...

By Stephen Taub • Jan. 10, 2006

Ex-Dynegy Finance Pair Get Prison Terms

Two former members of Dynegy Inc.’s finance team received prison sentences stemming from their roles in the energy company’s accounting scandal.Gene Foster, the former vice president of tax, got 15 months behind bars, three years of probation, and a $1,000 fine, according to The Houston Chronicle...

By Stephen Taub • Jan. 6, 2006

SEC Clarifies Policy on Fines

The Securities and Exchange Commission has clarified what many critics have said is a capricious and controversial policy for fining companies as part of a disciplinary action or settlement. The commission also announced settlements with two companies, McAfee Inc. and Applix Inc., only one of whi...

By Stephen Taub • Jan. 5, 2006