SEC

A&A

SEC Delays Plan to Oversee Bank Brokerages

The Securities and Exchange Commission has again delayed implementation of a plan that would give the commission oversight over brokerage services offered by banks-a move some banks say would force them out of business, Bloomberg News reported.Hearing the objections of banks, regulators and the Federal Reserve, the SEC delayed until March 31 the rule that exempts banks offering brokerage services from SEC oversight, Bloomberg reported.Banks have complained, saying the rule would be prohibitively expensive since each individual account would have to be scrutinized."The proposal would s
Technology

Former E&Y Audit Partner Faces Five Years on Obstruction Charges

Former Ernst & Young audit partner Thomas Trauger went to great lengths to keep from being “second-guessed” and last week pleaded guilty to charges he obstructed a federal investigation.The subject of the government's probe was NextCard Inc., a San Francisco company that distributed credit cards via the Internet. The company's troubles began when it handed out too many cards to unqualified holders, the Associated Press reported.
Tax

IHI's Outside Accountant Pleads Guilty, Will Testify Against Ex-CEO

In a case the Securities and Exchange Commission called one of the biggest pyramid schemes in history, federal prosecutors secured a guilty plea from another participant, who has agreed to testify against Stan Van Etten, former chief executive officer of International Heritage Inc., the News-Observer in North Carolina reported.David Walter Brown, 50, of Raleigh, IHI's outside accountant, pleaded guilty in federal court in Raleigh to a conspiracy charge, agreeing also to testify against Van Etten.
A&A

Divided SEC Votes to Begin Inspections of Hedge-Fund Operators

Large hedge-fund advisers will be required to register with the Securities and Exchange Commission and undergo inspections starting in February 2006, the SEC decided Tuesday.The change was approved on a 3-2 vote and will only apply to hedge-fund operators who manage $30 million or more of assets, Dow Jones Newswires reported.SEC Chairman William Donaldson led the move for greater oversight of hedge funds. He said inspections would provide more information about the industry and prevent fraud. Failing to do so "would be a major dereliction" of the SEC's duty to investors, he said.

SEC, Spitzer Look for Conflicts in Investment, Retirement Planning Relationships

In a new conflict of interest case, the Securities and Exchange Commission (SEC) is finding signs that mutual-fund companies and other investment advisors paid retirement-plan consultants for referrals, the Wall Street Journal reported, quoting sources close to the SEC's year-long investigation.Last December, the SEC began an investigation of possible conflicts within the financial services industry, looking for “quid pro quo” arrangements between consulting firms and financial managers, especially when the two branches fall under the same umbrella company.Last week, New York Attorne

Aon Accused in Insurance Scandal; Greenberg Leaves Marsh

In an uproar former Securities and Exchange Commission Chairman Arthur Levitt calls “the scandal of the decade, without a question” the furor unfolding in the insurance industry is getting uglier by the day, with New York Attorney General Eliot Spitzer claiming to have found signs of improper business practices at Aon Corp., the New York Times reported. In another development, Jeffrey W.
Tax

SEC Charges Qwest with Multi-Faceted Accounting & Financial Reporting Fraud

Qwest Agrees to Anti-Fraud Injunction, $250 Million Penalty, and Will Permanently Maintain Chief Compliance Officer Reporting to the Outside Directors of the Board. On Thursday, The Securities and Exchange Commission charged Qwest Communications International Inc., one of the largest
Community News

KPMG, Auditors Sanctioned by SEC, Agree to $10M Settlement

The Securities and Exchange Commission this week sanctioned KPMG LLP, two former KPMG partners, and a current partner and senior manager for engaging in improper professional conduct as auditors for Gemstar-TV Guide International, Inc. KPMG and the auditors agreed to settle the action without admitting or denying the SEC's findings. As part of the settlement, KPMG was censured and agreed to pay $10 million to harmed Gemstar shareholders. This represents the largest payment ever made by an accounting firm in an SEC action.

SEC Opens Formal Probe into Fannie Mae

The Securities and Exchange Commission is formally investigating allegations of accounting tricks by the mortgage giant Fannie Mae.In a disclosure filed with the SEC late Tuesday, Fannie Mae said the SEC “has initiated a formal order of investigation," Dow Jones Newswires reported.
A&A

SEC Probes Unit of Thomson Financial

The Securities and Exchange Commission has subpoenaed Thomson Financial to find out more about its service providing information to public companies about their institutional investors, the Wall Street Journal reported."Thomson Financial is cooperating fully with the SEC and has been informed that the inquiry should not be construed as an indication by the commission or its staff that any violation of law has occurred," the company said in a statement. The Stamford, CT, company is a unit of Thomson Corp.

Rite Aid Scandal Earns Ex-Officer 10 Years in Jail

Rejecting arguments that a former Rite Aid Corp. officer should be spared jail time, a federal judge sentenced 76-year-old Franklin Brown to 10 years in prison, Reuters reported.

Financial Professionals Question Accuracy and Timeliness of Credit Ratings

Corporate financial professionals are questioning the accuracy and timeliness of credit ratings and believe the Securities and Exchange Commission (SEC) must take a more active role in promoting competition among the credit rating agencies, according to a new survey released today by the Association for Financial Professionals (AFP).According to the survey, a third of financial professionals (34%) believe that their company's ratings are inaccurate, while only 42% believe changes in their organization's rating are made on a timely basis.
Community News

SEC Names Julie Erhardt as Deputy Chief Accountant

Securities and Exchange Commission Chairman William H. Donaldson today announced the selection of Julie A. Erhardt to serve as Deputy Chief Accountant for the Commission. As Deputy Chief Accountant, Erhardt will report to Donald T. Nicolaisen, Chief Accountant. She will share responsibilities for the day-to-day operations of the Office of the Chief Accountant with Scott Taub and Andrew Bailey. These responsibilities include resolution of accounting and auditing issues, rulemaking projects, and oversight of private sector standard-setting efforts and regulation of auditors.
Technology

SEC Uses New Funding to Enhance Investigation Technology

The Securities and Exchange Commission is putting new cash to good use as it updates its technology to make investigations easier and more efficient.Gone are the days when boxes of documents lined
Community News

SEC Proposes IPO Allocation Reforms

The Securities and Exchange Commission this week proposed amendments to Regulation M that would prohibit certain market activities that undermine the integrity and fairness of the offering process, particularly with respect to the allocation of Initial Public Offerings (IPOs). The amendments would also enhance the transparency of underwriters' aftermarket activities. Adopted in 1996, Regulation M governs the activities of underwriters, issuers, selling security holders, and others in connection with offerings of securities.

Players Line Up Legal Counsel in Fannie Mae Case

As the Justice Department commences a criminal probe into accounting practices at mortgage lender Fannie Mae, the parties involved are retaining some of Washington's top attorneys.Fannie Mae confirmed the Justice Department's investigation in a Securities and Exchange Commission filing, just days after executives testified before Congress that no wrongdoing had occurred, Dow Jones Newswires reported.The U.S.

SEC’s Nicolaisen Wants FASB to Handle Stock-Option Rule

The Financial Accounting Standards Board (FASB) should stick with its plan to issue a new rule on expensing stock options by the end of the year.

SEC: Time May Run Out on Internal Controls Compliance

The Securities and Exchange Commission last week warned that there will not be 100 percent compliance with the new internal controls requirements, with many firms possibly failing to comply, Dow Jones Newswires reported.Public companies are required by the Sarbanes-Oxley Act of 2002 to assure investors that internal controls are adequate.
A&A

RS Investments Settles Market-Timing Probes for $25 Million

The Securities and Exchange Commission (SEC) has charged investment adviser RS Investment Management L.P., CEO G. Randall Hecht, and former CFO Steven M. Cohen with favoring certain mutual fund investors by allowing them to engage in frequent short-term trading (market timing). According to the Commission, RS entered into secret agreements that permitted select investors to generate millions of dollars in trading profits at the potential expense of other shareholders, and allowed RS to reap substantial advisory fees.
Tax

SEC Files Charges Against Former Employees of Peregrine for Orchestrating Massive Accounting Fraud

The Securities and Exchange Commission (SEC) this week filed civil fraud and related charges against six former senior officers of San Diego-based Peregrine Systems, Inc. who orchestrated and attempted to cover up a massive accounting fraud at the company. According to the Commission's complaint filed in the United States District Court in San Diego, the Peregrine defendants fraudulently inflated the product revenue Peregrine reported in its filings with the Commission and elsewhere.

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