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SEC Files Civil Fraud Charges Against PIMCO

The Securities and Exchange Commission today filed civil fraud charges in federal court against PIMCO Advisors Fund Management LLC (PAFM), PEA Capital LLC (PEA), PIMCO Advisors Distributors LLC (PAD), Stephen J. Treadway, the chief executive officer of PAFM and PAD as well as the chairman of the board of trustees for the PIMCO Funds: Multi-Manager Series, and Kenneth W. Corba, PEA's former CEO, for their defrauding of PIMCO mutual fund investors, in connection with an undisclosed market timing arrangement with Canary Capital Partners LLC.

Skilling Ordered to Avoid Alcohol, Given Curfew

Facing more than three dozen counts of fraud and other crimes related to Enron’s 2001 collapse, Jeffrey Skilling has now been ordered to quit drinking, told to enter a rehab program and given a curfew by a federal judge.Skilling, 50, and his wife were involved in an April 9 melee in New York City, during which he accused other bar patrons of being FBI agents, attempted to pull the license plate off a car and lifted the shirt of a woman to see if she was wearing a wire.
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Arizona Firm Fails PCAOB Inspection

The Public Company Accounting Oversight Board (PCAOB), created by the Sarbanes-Oxley Act of 2002, has rejected an Arizona audit firm’s application to audit publicly traded companies, the Washington Post reported.As part of its charge to clean up the accounting industry after a spate of scandals rocked the profession, the PCAOB conducts regular inspections of firms that audit public companies. James C.

Vanguard’s Founder Calls For Better Fund Governance, Highlights Nine Emerging Issues

In a speech before the Mutual Fund Regulation and Compliance Conference entitled, "Mutual Funds in the Coming Century ... While We're At It, Let's Build A Better World," John Bogle called on the mutual fund industry to heed the Investment Company Act of 1940, which requires that mutual funds be managed in the interest of the fund shareholders, and not in the interest of their managers. Mr.
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Oxley Covers SOX, Stock Options and Mutual Fund Issues

It’s been two years since Congress passed sweeping reform legislation intended to clean up corporate accounting and stem the wave of fraud that swept through corporate America. Now one of the Sarbanes-Oxley Act sponsors wants to know if the legislation is working as intended.Rep.
Practice Management

‘Controlled’ Companies Taking Advantage of Loophole

By calling themselves "controlled" corporations, dozens of companies are dodging rules created to make corporate boards more isolated from management, the Wall Street Journal reported.Companies that have filed with the Securities and Exchange Commission saying that a majority of their board members will not be independent include Cox Communications, EchoStar Communications Corp. and Weight Watchers International Inc., the Journal reported. Another avenue around the new rules involves companies that are not forming independent compensation committees to oversee executive pay.

Google IPO Sparks Excitement among Investors, Wall Streeters

First Google became a verb: Have you goggled today?
Community News

Pending Suit, Board Tenure Add to Grasso's Troubles

With both sides digging in and no sign of a settlement, New York Attorney General Eliot Spitzer is expected to soon bring suit to recoup some of the $139.5 million in compensation paid to former New York Stock Exchange Chairman Richard Grasso.Regulators working on the investigation have subpoenaed current and former Big Board directors who approved the excessive compensation packages. The subpoenas signify a broadening of the investigation, which until now had focused on Grasso and Kenneth G.

Computer Associates Chief Steps Down

As a federal criminal investigation into securities fraud and obstruction shifts in his direction, Sanjay Kumar, resigned yesterday as Computer Associates’ chairman and chief executive, the New York Times reported. The fourth-largest independent software company, CA is based in Islandia, NY. With his resignation, Kumar becomes the latest in a string of chief executives to be caught in the crossfire as accounting scandals have rocked U.S. companies.

Scrushy Must Repay $25 Million Loan to HealthSouth

Upholding a lower court ruling, the Delaware Supreme Court ruled on Thursday that HealthSouth’s founder and former chief executive Richard Scrushy must pay back a $25 million loan to the company.In July 2002, Scrushy repaid the loan using HealthSouth shares, which tanked just after the repayment when he warned of lower-than-expected profits and said he planned to reorganize the company, Reuters reported.The stock decline was the reason the company sued him after he was accused of being behind a $2.7 billion fraud, which he denies even though he faces 85 federal counts of fraud and cons

Computer Associates Fires Nine as Federal Probe Continues

As part of an ongoing federal investigation into its accounting practices, Computer Associates International Inc. fired nine employees Monday, all members of the finance and legal departments, the Wall Street Journal reported.None of the fired employees was a member of the Islandia, NY, company’s executive management team.
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Ernst & Young Suspended from Taking New Audit Clients for Six Months

Arguing that Ernst & Young engaged in "improper professional conduct" an administrative law judge on Friday suspended the Big Four accounting firm from accepting new publicly traded companies as audit clients for six months and ordered the company to make $1.7 million in restitution, the Wall Street Journal reported.The case was brought by the enforcement division of the Securities and Exchange Commission, which claimed auditor independence issues in Ernst’s relationship with audit client PeopleSoft.

SEC Adopts Fund Disclosure Rules and Foreign Bank Loan Exemption

The Securities and Exchange Commission on Tuesday voted to adopt a rule and form amendments designed to provide foreign banks under certain conditions exemption from insider lending prohibitions; to propose for comment new rules regarding shell companies, "reverse mergers" and use of securities registered on Form S-8; and voted to adopt disclosure requirements for investment companies regarding their policies and procedures on market timing, fair valuation and selective portfolio disclosure.Disclosure Regarding Market Timing, Fair Value Pricing, and Selective Disclosure of Portfolio Hold

Computer Associates Officials Plead Guilty

Another corporate official has pled guilty to charges related to accounting fraud. David Rivard, 36, former vice president of finance at Computer Associates, pleaded guilty yesterday morning in Federal District Court in Brooklyn.Rivard admitted to obstructing the government’s investigation of accounting irregularities at the company and conspiring to commit securities fraud, the New York Times reported. David Kaplan, a former senior vice president, and Ira H.

SEC Rethinking Late Trade Crackdown

The Securities and Exchange Commission may offer alternatives to its plan to stop late trading in mutual funds.While Chairman William Donaldson defended the 4 p.m. "hard close" proposal before the Senate Banking Committee Thursday, he acknowledged the concerns. The SEC has received almost 1,100 formal comments, mostly in opposition, the Chicago Tribune reported.Many investors and retirement plan administrators oppose the plan, which would require all mutual fund trades to be placed with the fund firm — not just brokers — by 4 p.m. Eastern time to receive that day’s price.

SEC Publishes Notice of PCAOB Standard on Wording in Audit Reports

The Securities and Exchange Commission this week published a notice soliciting public comments on Public Company Accounting Oversight Board (PCAOB) Auditing Standard No. 1, entitled "References in Auditors' Reports to the Standards of the Public Company Accounting Oversight Board." If approved by the Commission, Auditing Standard No.

SEC Subpoenas Four MarketWatch Executives in Calandra Probe

The Securities and Exchange Commission stepped up its investigation into former Inc.

Congressmen Ask SEC to Rethink Late Trading Rule

A proposed rule to halt mutual fund trades after 4 p.m. may hurt investors more than help them, two congressmen told the Securities and Exchange Commission.The SEC made the proposal in mid-December as a way to help clean up trading abuses in the mutual fund industry. But according to the Wall Street Journal, Reps.

SEC Investigates Executive Compensation at Tyson Foods

The Securities and Exchange Commission is investigating Tyson Foods Inc., looking into the compensation paid to the company’s officers, including Chief Executive Officer John H. Tyson, 50, grandson of the company’s founder.The world’s largest meat processor acknowledged that the SEC’s probe has shifted from informal to formal, Bloomberg reported.According to company filings with the SEC, Tyson received a 2003 salary of $993,590 plus a $2.5 million bonus and $325,286 in “other compensation.” He was elected chairman in 1998 and became chairman in 2000.


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