Bramwell’s Lunch Beat: More Accounting Woes for Hertzby
Father and son charged in insider trading case
An investment banker at a Manhattan firm and his father were charged in court papers unsealed on Thursday with using inside information to earn more than $1 million illegally by trading in securities of five healthcare companies, wrote Larry Neumeister of the Associated Press. The charges, including conspiracy and securities fraud, were contained in a criminal complaint unsealed in Manhattan federal court against 34-year-old Sean Stewart and his 60-year-old father, Robert. Sean Stewart, a Manhattan resident, is a managing director at Perella Weinberg Partners LP. Sean Stewart was scheduled to appear on Monday in Manhattan federal court. His father, who lives on Long Island, was released on $500,000 bail in Manhattan. Perella Weinberg Partners said Sean Stewart has been suspended.
Hertz finds more accounting errors
Hertz Global Holdings Inc.’s accounting errors dating to 2011 will lower profit before taxes by an estimated $183 million, the car-rental company said, noting it won’t be able to meet regulatory filing deadlines, wrote Maria Armental of the Wall Street Journal. The company, which is still reviewing the figures, said it had found an additional $30 million in errors and warned that the figures are subject to change and that “such changes may be significant.” Hertz, which first disclosed the errors in March 2014 and has been under pressure from activist investors, appointed a new chief executive in November. The company also plans to close about 200 off-airport locations in the United States, roughly 5 percent of its locations outside airports, by the end of the second quarter. Hertz said it still hopes to file its audited results with the US Securities and Exchange Commission (SEC) by midyear.
House passes bill to make police death benefits tax-free
Death benefits for the families of fallen police officers would not be subject to federal income tax under a bill passed by the House on Tuesday as part of National Police Week, wrote Stephen Ohlemacher of the Associated Press. The House voted 413-0 to pass the bill. It now goes to the Senate, where similar legislation has bipartisan support. Rep. Erik Paulsen (R-MN), who sponsored the bill, said it clarifies federal law to make sure that both federal and state benefits for fallen public safety officers are treated the same in the tax code. Under the legislation, neither would be subject to the federal income tax.
Senate panel launches probe into Obamacare subsidies
A Senate panel announced on Thursday an investigation into Obamacare insurance subsidies, which Republicans claim have been improperly paid out without verification, wrote Sarah Ferris of The Hill. Sen. Rob Portman (R-OH), who chairs the Senate Permanent Subcommittee on Investigations, is demanding proof the Obama administration has been thoroughly checking a person's income level and legal status before handing out subsidies. He cited reports from H&R Block, which found that repayments have eaten into the average taxpayer’s refund by roughly one-third. The administration has yet to release official figures from this past tax season. In a May 13 letter to the US Department of Health and Human Services, Portman demanded a copy of all documents related to federal and state verification processes. He also sent two pages of questions, which he said officials have previously ignored.
Tax man deserves some blame for disappointing US retail sales
Instead of rising by the 0.2 percent forecast by economists, US retail sales were little changed in April from March, according to data released on Wednesday by the US Commerce Department, wrote Rich Miller of Bloomberg. The flat reading was all the more surprising because it came against a background of an improving jobs market, rising household incomes, and lower gasoline prices. One possible explanation for the weakness: a surge in household payments to the federal government before the April 15 deadline for filing individual tax returns, Ted Wieseman of Morgan Stanley said in a note to clients. Americans forked over $44 billion more in taxes during this year's filing season than they did in 2014, according to the Congressional Budget Office. Income tax refunds changed little from a year ago, at $202 billion.
Barrett Business Services faces SEC investigation for accounting practices
Vancouver, Washington-based Barrett Business Services Inc. said this week it's being investigated by the SEC, wrote Andy Giegerich of the Portland Business Journal. Barrett, which specializes in accounting and staffing services, revealed in its quarterly report that staff of the SEC's San Francisco office of the Division of Enforcement is reviewing the company's accounting practices “with regard to its workers’ compensation reserves.” Barrett is cooperating with the investigation, the company said. The company lost $5.8 million during its most recent quarter.
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