UC Hopes to Lead Class Action Suit Against Andersen, Enron
The University of California (UC), the nation's largest university system, has announced plans to join a class action suit against 29 senior executives of the failed Enron Corp. and Big Five accounting firm Andersen.
The University claims it lost $145 million in Enron's collapse and seeks to be the lead plaintiff in the class action suit. UC and other plaintiffs claim Enron senior management misled them by filing false financial statements.
Should UC join the suit as the lead plaintiff, the University would be in a position to participate in the management and oversight of the litigation on behalf of the entire class. UC has asked that its lawyers, Milberg Weiss Bershad Hynes & Lerach LLP, be named as counsel for the class.
The suit asks for a refund of at least $1.1 billion on behalf of all plaintiffs as well as compensatory damages.
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AICPA Relegated to Quasi Agency of The SEC
The mega losses that Enron has “outsourced” to institutional investors, their auditors, the AICPA, and global financial markets are going to prove to be staggering. The financial costs alone (the first wave) will be sure to nearly top all of such costs we have ever experienced. The lost market value of the Enron stock along with the ensuing litigation costs of a pending University of California led class action law suite should prove to be a tidy tuition for those willing to learn from the class.
However it is the second wave that is most tragic. As a self regulating profession we have just told the investment world that the tools of our trade (financial judgments) can not be trusted. What now is there to stop the political forces of Washington DC to begin to relegate our society to that of a twice removed agency of the SEC? The CPA Vision Project 2011 was once a hope … and now perhaps a diminished dream.
The Enron “symptom” is by far the first and it won’t be the last unless we learn what professional courage really means and begin to “think out of our self-reflective box”. “Financial Metrics” reporting to the exclusion of “Human Metrics” reporting for publicly traded companies is parochial 19th Century thinking. This one issue will stand out as the single most shortsighted and embarrassing moments in the history of the AICPA. It will become the source of our professional demise unless our leaders start thinking and acting like leaders.
Neither Enron nor Anderson is the problem. We as a society bares 100% of that responsibility. We really don’t want to report on the underlying corporate attributes of a healthy or a sick company. And we cowardly avoid our reporting responsibilities because corporate America does not want certain information openly reported to the real owners of publicly traded companies. As it now stands – Enron being only one example– our financial reports should exclaim “Buyers be ware … year end audited financial statements do not fairly report the total state of health of the companies held in your portfolio”.
Politics will relegate our society to a quasi-governmental agency unless someone takes some swift and decisive action. We have an incredible opportunity right now to harness the current political energy of congress to pass legislation giving the AICPA leadership the teeth they need to revise the scope of reporting standards to include the “Human Metrics” side of the equation on all publicly traded corporations.
For a specific approach to resolving the two core problems that sire these “symptomatic issues” feel free to contact Mr. Carson at LJohnCarson@MSN.Com