SEC

Tax

SEC Files Emergency Action to Halt Ongoing Fraud by Northshore Asset Management

The Securities and Exchange Commission announced this week that it filed an emergency enforcement action to halt a fraud by Northshore Asset Management LLC (Northshore) and its three principals, concerning their misappropriation of assets of two hedge funds, Ardent Research Partners, L.P. (Ardent Domestic) and Ardent Research Partners, Ltd. (Ardent Offshore).
Tax

AICPA to Comment on PCAOB Proposal on Auditor Independence, Tax Services

The AICPA’s reaction was generally favorable to the rule proposed by the Public Company Accounting Oversight Board concerning tax services that can be offered to public company audit clients, but the Institute will submit a comment letter. Four circumstances are identified in the proposal that would be considered as impairing an auditor’s independence.

Bank of America to Settle SEC Mutual Fund Charges for $375 Million

The Securities and Exchange Commission on Wednesday announced a settled enforcement action against Banc of America Capital Management, LLC (BACAP), BACAP Distributors, LLC (BACAP Distributors) and Banc of America Securities, LLC (BAS) for entering into improper and undisclosed agreements that allowed favored large investors to engage in rapid short-term securities trading known as market timing in certain Nations Funds mutual funds and for fraudulently facilitating market timing and late trading in Nations Funds mutual funds as well as unaffiliated mutual funds.

SEC Considering Softening Impact of New Rules

The Securities and Exchange Commission may revise aspects of some major reform legislation to answer concerns that smaller companies are overburdened by the new requirements.But Chairman William Donaldson, in an interview with the New York Times, denied that he is backing away from an aggressive regulatory stance taken in the aftermath of Enron and other massive accounting scandals. He said he wants the rules to be more “cost-effective,” without weakening them."I'm not reacting to the 'pendulum swinging too far,"' Donaldson said in an interview.

SEC Announces Roundtable on Internal Control Reporting Requirements

The Securities and Exchange Commission announced today that it will host a roundtable discussion this spring regarding registrants’ and accounting firms’ experiences implementing the new reporting requirements under Section 404 of the Sarbanes-Oxley Act of 2002. The roundtable, which will include representatives of the Public Company Accounting Oversight Board (PCAOB), issuers, auditors, investors and other interested parties, is tentatively scheduled for April 2005.

SEC Approves Use Of Data-Tagged Corporate Reports

The U.S. Securities and Exchange Commission this week issued a release adopting amendments to establish a voluntary program related to eXtensible Business Reporting Language (XBRL). Registrants may voluntarily furnish XBRL data in an exhibit to specified EDGAR filings under the Securities Exchange Act of 1934 and the Investment Company Act of 1940.

SEC Sues Morgan Stanley, Goldman Sachs for Unlawful IPO Practices

The Securities and Exchange Commission (SEC) announced the filing in federal district court of separate settled civil injunctive actions against Morgan Stanley & Co. Incorporated (Morgan Stanley) and Goldman, Sachs & Co. (Goldman Sachs) relating to the firms' allocations of stock to institutional customers in initial public offerings (IPOs) underwritten by the firms during 1999 and 2000.
Tax

'Accounting Fraud' Penthouse Uncovered

Penthouse International Inc.
Community News

Auditors Hesitant to Use Judgment, Fear Challenges

Recent events have made auditors skittish about using their judgment in their work, as they fear challenges by lawyers, the media and regulators, Robert Herz, chairman of the Financial Accounting Standards Board (FASB) said in a statement reported by Financial Times.This reluctance to use judgment is in spite of a Securities and Exchange Commission (SEC) call for a principles-based approach to accounting.

Former ImClone CEO Waksal and Father to Settle SEC Insider Trading Case

Samuel Waksal, the former CEO of ImClone Systems Inc., and his father, Jack Waksal, have agreed to a final resolution of the insider trading case brought against them by the Securities and Exchange Commission. In documents filed on Wednesday with the federal court in Manhattan, Sam Waksal and Jack Waksal, without admitting or denying the allegations in the Commission's complaint, consented to pay more than $5 million in disgorgement and civil penalties from their unlawful trades in ImClone securities.

Ahold Problems Surface Again; Nine Charged in Scheme

The Securities and Exchange Commission filed enforcement actions last week against nine individuals alleging they aided and abetted a massive financial fraud by signing and returning materially false audit confirmations sent to them by the auditors of the U.S. Foodservice, Inc. subsidiary of Royal Ahold (Koninklijke Ahold N.V.). The actions filed name as defendants Mark A. Bailin, Kenneth H. Bowman, Timothy Neal Daly, Michael J. Hannigan, Peter O. Marion, John Nettle, Gordon Redgate, Bruce Robinson and Michael Rogers.

Google Settles SEC Suit for Failing to Report $80M in Options

The Securities and Exchange Commission last week charged Google, Inc. with failing to register the issuance of option grants to employees or provide required financial information to the option recipients. According to the Commission, the Silicon Valley search engine technology company issued over $80 million in stock options to its employees in the two years preceding its IPO, yet failed to register the securities or make financial disclosures mandated by federal securities law. To settle the charges, Google and its General Counsel, David C.

SEC Signals Possible Guidance on Options Expensing

The Securities and Exchange Commission's Chief Accountant Don Nicolaisen said Wednesday that while he fully supports the Financial Accounting Standards Board's decision to require stock option expensing, the SEC is realizing it may have to issue guidance to aid compliance, Dow Jones Newswires reported.Speaking to reporters at an internal controls conference at Stanford Law School on Wednesday, Nicolaisen said the commission is hearing corporate cries for help on how they should go about counting employee stock options as expenses."We are sympathetic to some of the requests people have fo
Tax

SEC Charges TV Azteca and Its Chairman Ricardo Salinas Pliego with Fraud

The Securities and Exchange Commission this week filed civil fraud charges against TV Azteca S.A. de C.V. (TV Azteca or the company), a Mexican issuer whose American depository receipts trade on the NYSE, its parent company, Azteca Holdings, S.A., de C.V. (Azteca Holdings), and three current and former TV Azteca officers and directors, Ricardo Salinas Pliego, Pedro Padilla Longoria, and Luis Echarte Fernandez.
Tax

Class Action Securities Fraud Lawsuits up in 2004

While the number of federal securities fraud class actions filed in 2004 increased only moderately from 2003 levels, rising to 212 companies sued from 181, the decline in stock market capitalization corresponding to these actions increased dramatically, according to a report released today by the Stanford Law School Securities Class Action Clearinghouse in cooperation with Cornerstone Research.
Community News

New Fannie Mae Executive Vows to 'Put Things Right'

Investors are hoping that management changes at Fannie Mae will bolster the company's reputation with regulators and Congress.Fannie Mae's board last Tuesday replaced the two top executives and fired its auditor, KPMG, as pressure mounted to make big changes in light of the company's accounting standards violations and the Securities and Exchange Commission's order for a restatement of possibly $9 billion.Chief Executive Officer Franklin D. Raines and Chief Financial Officer Timothy Howard were temporarily replaced by, respectively, Daniel H.

SEC Charges Walt Disney with Disclosure Violations

The Securities and Exchange Commission on Monday instituted settled enforcement proceedings against The Walt Disney Company (Disney). The Commission charged Disney for failing to disclose certain related party transactions between Disney and its directors, and for failing to disclose certain compensation paid to a Disney director. Under the settlement, Disney consented to the entry of an Order that it cease and desist from violating the proxy solicitation and periodic reporting provisions of the federal securities laws.
Tax

Knight Securities Settles, Pays $79M in Disgorgement and Penalties

The Securities and Exchange Commission on Friday announced the settlement of civil fraud charges against Knight Securities, L.P. The Commission issued an Order that found that Knight defrauded its institutional customers by extracting excessive profits out of its customers' orders while failing to meet the firm's duty to provide "best execution" to the institutions that placed those orders.
Community News

SEC Creates Committee to Examine SOX Impact on Small Public Companies

Securities and Exchange Commission Chairman William H. Donaldson announced on Friday the establishment of an advisory committee to assist the Commission in examining the impact of the Sarbanes-Oxley Act and other aspects of the federal securities laws on smaller public companies. Appearing at a press conference today with the two individuals named as Co-Chairs of the committee, Chairman Donaldson stated, "The Sarbanes-Oxley Act has already been of enormous benefit to America's investors and markets and will spur further improvements.
Tax

SEC’s Nicolaisen Welcomes PCAOB Involvement in Independence Standards-Setting

In response to the Public Company Accounting Oversight Board (PCAOB) action earlier this week, proposing certain ethics and independence rules for public comment, the Commission’s Chief Accountant, Donald T. Nicolaisen, noted that he welcomed PCAOB involvement in this important area. The PCAOB’s proposed rules grew out of its public roundtable on auditor independence held in July, and address issues relating to tax services and contingent fees.

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