SEC

Community News

SEC Cites ‘Harry Potter Fantasy,’ Presses Forward on Ernst Sanctions

The war of words between the Securities and Exchange Commission and Big Four firm Ernst & Young continues as the SEC has pledged to move forward with banning E&Y from accepting new audit clients for six months.SEC lawyers are pushing for sanctions against E&Y as a result of independence issues related to the CPA firm’s relationship with software developer PeopleSoft in the late 1990s.The SEC is likening E&Y’s defenses to the popular Harry Potter books and calling them "another work of

Morgan Stanley Investigated by Massachusetts and New York

Morgan Stanley is under investigation by Massachusetts and New York for allegedly pushing its in-house mutual funds and not disclosing to investors that brokers made better commissions when they sold the house funds.The practice of pushing house funds is not illegal, but full disclosure to investors about commissions is required. Massachusetts Secretary of the Commonwealth William Galvin filed a complaint on Monday, and long with New York Attorney General Eliot Spitzer, plans to look into whether other investment firms improperly tied bonuses and commissions to sales of house funds.
Practice

SEC Publishes Staff Report On Proxy Process Review

The Securities and Exchange Commission has published a report prepared by its Division of Corporation Finance concerning the Division's review of the Commission's rules and regulations regarding the nomination and election of directors. The staff report notes the need to improve the existing proxy process and recommends action in two areas: improved disclosure and improved shareholder access to the director nomination process.

President Bush Paves Way For SEC to Hire Accountants

This week it appears that the federal government is doing its part to expand the accounting job market. President Bush has signed legislation that will permit the Securities and Exchange Commission to speed up the hiring of more than 800 additional staff.
Community News

Deloitte's and Ahold's Offices Raided

On Monday, July 7, the fiscal and economic crime unit of the public prosecutor's office in Amsterdam conducted raids of Dutch food giant Ahold and local offices of Big Four accounting firm Deloitte & Touche. The raids were performed in connection with a criminal investigation relating to Ahold's consolidation of a Scandinavian joint venture.Authorities conducting the raids seized several boxes of documents at both locations.

$750 Million MCI/WorldCom Settlement is Largest in SEC History

A federal judge in Manhattan has given a green light to a settlement between telecommunication giant MCI, formerly WorldCom, and the Securities and Exchange Commission. The settlement represents a resolution to the largest ever corporate bankruptcy in U.S. history.MCI/WorldCom has agreed to pay $750 million, half again as much as the $500 million that had been tentatively agreed upon earlier this year.
Community News

Ernst & Young: SEC's Request is 'Outrageous'

In late May 2003, SEC staff recommended a six month suspension of new client acquisition for Big Four firm Ernst & Young, in response to alleged independence violations in its relationship with audit client PeopleSoft in the late 1990s.E&Y has formally responded to the SEC recommendation, calling it an "outrageous" overreaction to claims of independence misconduct.E&Y attorney Stephen Sacks has filed a court briefing in which he indicates that the SEC's staff recommendati

Accounting Watchdog Agency Has Bookkeeping Problems of Its Own

The Securities and Exchange Commission, that venerable agency charged with ensuring that publicly held companies are accountable for their own bookkeeping correctness, now has to address some bookkeeping problems of its own. In an internal audit of the SEC for the fiscal year that ended September 30, 2002, it was found that the agency did not live up to expected accounting standards when it came to recording employee-related costs.
Community News

Companies Fail to Heed SEC’s Deadline For Insider Trading Disclosure

Dozens of small- and mid-cap companies have failed to comply with a Securities and Exchange Commission (SEC) deadline for them to file insider trading information on their websites, according to a survey by investor relations consultants Blunn & Company Inc.The survey of 300 small- and mid-cap companies found that 11% had failed to meet the SEC’s June 30, 2003 deadline. All of the companies surveyed are included in the Standard & Poor’s Small-Cap and Mid-Cap indexes.

PCAOB Sets Rules For Its Employees

The Public Company Accounting Oversight Board set new rules on Monday that limit the types of investments its members can own. The rules are designed to protect the board members from any possible accusations of conflicts of interest. Board members and staff of the PCAOB as well as spouses and dependents of PCAOB members and staff are restricted from having any financial interest in any public accounting firm that performs audits of publicly-held companies and is thus under the jurisdiction of the PCAOB.

SEC: Perpetrators of Fraud Should Pay Their Own Fines

Should executives who settle corporate fraud cases be made to pay fines out of their own pockets? This is the issue raised this week by the U.S.
Community News

Securities and Exchange Commission Names New Chief Accountant

The Securities and Exchange Commission has announced the selection of Susan G. Markel as Chief Accountant of the Division of Enforcement. Ms. Markel succeeds Charles D. Niemeier, who was appointed in late 2002 as a member of the Public Company Accounting Oversight Board. As Chief Accountant, Ms. Markel will serve as a senior official in the Division of Enforcement and will advise the Division on investigations involving accounting and auditing matters. "Susan is a terrific addition to the Division's senior ranks," said Stephen M. Cutler, the director of the Division of Enforcement.

SEC Investigates Coca-Cola

Coca-Cola Company is under investigation by the Securities and Exchange Commission for allegations of deceptive marketing and accounting practices.

Former Employees of Dynegy, Inc. Sued by SEC For Fraud

Securities and Exchange Commission Press Release - On Thursday, the Securities and Exchange Commission (SEC) filed securities fraud charges against three former employees of Dynegy Inc. in connection with their roles in Dynegy's Project Alpha, a $300 million financing transaction that disguised the company's true financial condition. In a civil suit filed in the U.S.
Community News

E&Y Has New Definition For A 'Clean Audit'

The Wall Street Journal is reporting this week that Big Four firm Ernst & Young encouraged audit client HealthSouth Corp. to classify some rather unusual services under the umbrella of audit-related fees.
Practice Management

Reports Blast Corporate Culture That Caused WorldCom Collapse

Two new reports on the collapse of WorldCom Inc. place the blame for the company’s demise on the shoulders of founder and Chief Executive Officer Bernard J. Ebbers. The reports accuse him of running a company so concerned about meeting Wall Street expectations that warnings about accounting irregularities were met with scorn and ridicule.The nation’s second-largest long distance company was the victim of executive hubris, the reports found."The fraud was the consequence of the way WorldCom's chief executive officer, Bernard J. Ebbers, ran the company," one report read.

Consumer Groups Charge E&Y With Undermining Sarbanes-Oxley

Five consumer groups have contacted Securities and Exchange Commission Chairman William Donaldson with a complaint that Big Four firm Ernst & Young is undermining Sarbanes-Oxley legislation by advising companies that there is a way around the rules designed to promote auditor independence.Consumer Action, the Consumer Federation of America, Consumers Union, Common Cause, and the national Public Interest Research Group have all signed a letter to Chairman Donaldson asking that the SEC investigate the possibility that corporate boards can give blanket pre-approval of non-audit services by the
Community News

Ex-Xerox Execs Settle Accounting Fraud Claims

Six former executives of the Xerox Corporation have been charged with securities fraud and have agreed to pay $22 million in penalties as a result of their participation in accounting scandals at the company.The SEC Enforcement Action was filed last week against the six former executives, which included its former chief executive officers, Paul A. Allaire and G. Richard Thoman, and its former chief financial officer, Barry D.
Community News

NASD Pushes CEO, 'Chief Compliance Officer' Assurances

The National Association of Securities Dealers (NASD) wants its member firms to act to reassure investors that they have proper supervisory policies and procedures in place.
Community News

IBM Accounting Practices Again Being Scrutinized by SEC

Computer giant IBM disclosed in a press release late Monday that the SEC has launched an investigation into its accounting practices."The SEC is seeking information relating to revenue recognition in 2000 and 2001 primarily concerning certain types of customer transactions. IBM believes that the investigation arises from a separate investigation by the SEC of a customer of IBM's Retail Store Solutions unit.

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