Legal issues

Halliburton Settles SEC Case; Faces Shareholder Suit

Filings in a class-action suit on behalf of disgruntled Halliburton Co. investors indicate that high-level accounting fraud occurred at the company between 1998 and 2001, which includes the two years Vice President Dick Cheney was the company's chief executive, the New York Times reported.The filings reflect the contentions of four former finance employees and indicate the accounting improprieties extend far beyond those outlined by the Securities and Exchange Commission, which settled its civil suit with the company on Tuesday.
Tax

Bristol-Myers to Pay $150M to Settle Accounting Fraud Charges

The SEC announced this week that it has filed an enforcement action against Bristol-Myers Squibb Company.
A&A

Franklin Advisers to Pay $50 Million; Undergo Compliance Reform

The Securities and Exchange Commission this week announced that Franklin Advisers, Inc., an investment adviser firm in the fourth largest mutual fund complex in the U.S., has agreed to pay $50 million dollars and undergo compliance reforms to settle charges that it allowed rapid in-and-out trading, known as market timing, in mutual funds it managed, contrary to fund prospectus language. Under the settlement, Franklin will pay $50 million, including disgorgement of $30 million and a civil penalty of $20 million.
Community News

U.K. Resists Request to Cap Liability, a Blow to the Big Four Firms

In a blow to the Big Four accounting firms, the United Kingdom's Office of Fair Trading rebuffed the firms' claim that a litigation cap would boost competition, the Financial Times reported on its website.The firms had campaigned to limit their liability but the U.K.
A&A

Victims of ID Theft Applaud New Way to ‘Freeze’ Credit Reports

Bridget Thomas of Prairieville, Louisiana, lobbied for a way to block access to credit reports in her state after she was badly burned by identity theft that destroyed her credit status.A woman with the same name as Thomas, but a different middle initial, obtained her social security number and started spending.Lawmakers in Louisiana and a few other states, moved by stories like Thomas’, have instituted a privacy option called a security freeze.

Court Sides With SEC in Keeping Ex-Chairman’s Records Private

A federal appeals court has ruled that the Securities and Exchange Commission was right to deny a media group access to former chairman Harvey Pitt’s telephone logs, message slips and appointment calendars.The U.S. District Court of Appeals for the District of Columbia determined that those records were personal and not subject to the Freedom of Information Act, the Associated Press reported. New York media company Bloomberg L.P.
Tax

Halliburton to Pay $7.5 Million to Settle SEC Charges

The Securities and Exchange Commission announced today enforcement proceedings against Halliburton Co., its former chief financial officer, Gary V. Morris, and its former controller, Robert C. Muchmore, Jr. The Commission's actions are in response to Halliburton's failure to disclose a 1998 change to its accounting practice.
Tax

Tough Prosecutors Changing Corporate Environment

The consequences of bad corporate behavior have never been so severe or so well-publicized.As yet another high-profile executive is led away in handcuffs on the nightly news, corporate officials are getting the point that fraud doesn’t pay.Justice Department officials and legal observers say the crackdown by the two-year-old Corporate Fraud Task Force combined with laws that hold the executives themselves liable for malfeasance have had a "significant deterrent effect," according to the Associated Press.The Justice Department says the task force has prosecuted more than 700 people a
Tax

Scandal-Ridden Parmalat Seeks Damages from Citigroup

Parmalat Finanziaria SpA has gone to court seeking damages from Citigroup Inc., which allegedly played "an integral part" in the Italian dairy giant’s collapse.The suit was filed Thursday in Bergen County Superior Court in New Jersey by Parmalat Chairman Enrico Bondi, who is trying to salvage the company from the billions in losses it sufffered in a massive fraud scandal. According to Bloomberg News, the complaint states that Citigroup structured the company’s financing so that debt was hidden and cash flow was falsely inflated.
Community News

PricewaterhouseCoopers Faces Discrimination Suit

Despite developing a lucrative relationship with Boeing on behalf of her employer, PricewaterhouseCoopers LLP, Melissa Page filed suit last month claiming she was denied partnership by one of the world’s largest public accounting firms, the Chicago Tribune reported.With a law degree and 11 years of tax consulting experience, Page joined the firm in 2000, three years after joining the Chicago office.
Tax

California CPA’s Appeal of Disbarment Denied

The Treasury Department has denied the appeal of Joseph R. Banister from an administrative law judge’s decision that Banister be disbarred from practice before the Internal Revenue Service. Banister is a Certified Public Accountant from San Jose and former IRS criminal investigation agent.The IRS Office of Professional Responsibility, in a complaint against Banister, alleged that he was misrepresenting the law to taxpayers and that he failed to file his own federal income tax returns for tax years 1999-2002.
Community News

Denver Accounting Firm Settles SEC Case

Denver-based Levine Hughes & Mithuen settled a Securities and Exchange Commission complaint related to its audit work, paying a $50,000 fine and neither admitting nor denying wrongdoing, the Rocky Mountain News reported.The firm was accused by the SEC of destroying documents and altering work papers as the SEC investigated Sport-Haley Inc., a client of Levine Hughes & Mithuen, which is ranked as the 19th largest accounting firm in the Denver area.As part of the settlement, the firm agreed not to practice accounting before the SEC, but it can apply to be reinstated in three years.
A&A

Bonuses to IRS Attorneys Questioned

Whopping bonuses paid to the Internal Revenue Service’s top attorneys are raising eyebrows on Capitol Hill and among the agency’s non-Senior Executive Service employees, the Washington Post reported.Between 2001 and 2003, the IRS regularly paid its attorneys bonuses averaging about $20,000 with the highest award being $47,000 for an attorney singled out by President Bush.The bonuses have caused a stir between the IRS and the National Treasury Employees Union, which believes that performance bonuses are now institutionalized among top employees and are not based on actual performance.
Community News

FDIC Suit Against Ernst & Young Ruled to be Without Merit

A lawsuit charging Big Four accounting firm Ernst & Young with fraud and negligence in relation to the 2001 failure of a Chicago savings and loan has been ruled to be without merit by a three-judge panel in Chicago, the Associated Press reported.The $2 billion lawsuit, brought by the Federal Deposit Insurance Corporation, sought damages from Ernst & Young for the more than $500 million lost by the agency’s insurance fund, plus triple damages, the AP reported. The FDIC accused Ernst & Young of misstating Superior Bank’s assets.
Community News

U.K. Delays Action on Auditor Liability Protection

Seeking to cap their liability when a company implodes on their watch, accounting firms in the United Kingdom and throughout Europe were disappointed last week by the U.K.’s decision to delay action on proposals to limit auditor liability, the Wall Street Journal reported.U.K. accounting firms have been trying for nearly a decade to get liability protection and the delay is a setback to accounting firms across the European Union that had been closely watching the U.K.’s action hoping it would begin a trend across Europe.The meltdown of companies such as Enron in the U.S.
Tax

MCI Files Suit to Collect Close to $300M in Funds Loaned to Ebbers

In the heydays leading up to the collapse of WorldCom and other corporate entities, loaning money to top executives was a common practice. MCI Inc., formerly known as WorldCom, filed suit last week to recoup more than $300 million ousted chief executive Bernard J. Ebbers still owes the company.Ebbers borrowed $408 million from WorldCom after company stock he had pledged as collateral for personal loans lost value, the Wall Street Journal reported. When the stock no longer provided adequate collateral, Ebbers was going to have to sell stock to cover the loans.
Practice

SEC Charges Lay, Enron's Former Chairman and CEO, with Fraud & Insider Trading

The Securities and Exchange Commission today initiated civil charges against Kenneth L. Lay, former Chairman and Chief Executive Officer of Enron Corp., for his role in a wide-ranging scheme to defraud by falsifying Enron's publicly reported financial results and making false and misleading public representations about Enron's business performance and financial condition. The Commission also alleges Lay profited from the scheme to defraud by selling large amounts of Enron stock at prices that did not reflect its true value.
Tax

Five Rules to Detect and Avoid Phishing Scams

One of the more sinister and increasingly prevalent methods of identity theft is the practice of "spoofing" or "phishing," involving the sending of e-mails that mirror the appearance of a popular Web site or company in an attempt to commit identity theft.

Cost to Fix Freddie Mac Accounting Problems: $376 Million

Freddie Mac executives told analysts Wednesday that it spent about $376 million last year to fix accounting errors that led to the ouster of three top executives and a massive financial restatement.Chief Financial Officer Martin Baumann said Freddie Mac spent $172 million last year just on its earnings restatement, which resulted in a $5.1 billion cumulative, net increase to earnings from 2000 through 2002, the Wall Street Journal reported"That was just digging down, finding the accounting errors, fixing them, restating the results," Baumann said. Freddie Mac, the second largest U.S.

Computer Associates Investors Seek Past Executive Pay

An investment group that holds shares of Computer Associates International Inc. is seeking more than $1 billion it claims was paid to executives under false pretenses.Ranger Governance Ltd., which filed a lawsuit Tuesday in U.S. District Court in Brooklyn, N.Y., says the software maker in fiscal 2000 and 2001 paid executives cash, stock options and restricted stock that was based on erroneous financial reporting, the Wall Street Journal reported.The lawsuit names 10 former and two current executives. They include former chief executives Charles Wang and Sanjay Kumar.

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