Fraud
Telling the Truth During Earnings Calls
Is the CEO or CFO lying during the quarterly earnings call? How can you tell? David F. Larcker and Anastasia A. Zakolyukina of the Stanford Graduate School of Business turned to the rich data set of quarterly calls and subsequent financial restatements. After studying Q&A sections of transcripts of hundreds of calls with CEOs and… » Read More
Power Corrupts – So Does Powerlessness
Rosabeth Moss Kanter points out another reason that the “tone at the top” is only one factor for corporate compliance in Powerlessness Corrupts. “Power corrupts, as Lord Acton famously said, but so does powerlessness. Though powerlessness might not result in the egregious violations associated with arrogant officials who feel they are above the law, it… » Read More
Ernst & Young’s 11th Global Fraud Survey
Driving ethical growth – new markets, new challenges, the title of Ernst & Young’s 11th Global Fraud Survey, shows fraud is up; audit and legal are stretched to deal with these challenges; compliance is patchy; and Boards need more and better information to manage the risks. They interviewed more than 1,400 chief financial officers, and… » Read More
What About the Rating Agencies?
There has been lots of criticism aimed at Goldman Sachs over the Abacus 2007-AC1 deal. They help set up a CDO so their client, Paulson & Company, could make a bet on a downturn in the residential real estate market. To make that bet, they allowed Paulson to influence the securities that went into the… » Read More
The Similarites Between WaMu and GM
Never stop the production line! Yesterday, evidence came out that Washington Mutual knew about fraud in its residential mortgage originations. No surprise. There was lots of fraud in the heyday of the residential mortgage boom. What was surprising was that WaMu allowed these loans to be sold to investors and packaged into residential mortgage backed… » Read More
Consumer Complaints and Fraud
I occasionally like to look at consumer fraud complaints to see if I can learn any lessons for corporate compliance.On the consumer side there is tremendous volume of complaints and many parties trying to help. It caught my eye when four different organizations got together to identify the top consumer complaints for 2009. Here are… » Read More
National Consumer Protection Week
National Consumer Protection Week 2010 is March 7-13. Take advantage of the FTC’s free resources, which can help you protect your privacy, manage money and debt, avoid identity theft, understand credit and mortgages, and steer clear of frauds and scams. This year’s theme is Dollars & Sense: Rated “A” for All Ages. The idea is… » Read More
Madoff Losses Down from $65 Billion to $20 Billion
How do you value fraud? When the Madoff ponzi scheme collapsed the claim was that there was $65 billion in losses. That was the total dollar value on the account statements given to investors. Of course, that number was fictional because there were not real assets behind those numbers. The trustee overseeing the liquidation of… » Read More
Fraud Charges Against Ken Lewis and Joseph Price
New York Attorney General Andrew Cuomo filed securities fraud charges against former Bank of America CEO Kenneth Lewis and former Chief Financial Officer Joseph Price. The Attorney General claims that the two decided not to disclose the enormous losses at Merrill Lynch & Co. before getting shareholder approval to acquire the Wall Street firm. The… » Read More
SEC Goes After Sub-Prime Lender
The Securities and Exchange Commission charged three former top officers of New Century Financial Corporation with securities fraud for misleading investors as New Century’s subprime mortgage business was collapsing in 2006. At the time of the fraud, New Century was one of the largest subprime lenders in the nation. In its complaint, the SEC alleges… » Read More
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Compliance Building is published by Doug Cornelius, focusing on compliance and ethical issues for private equity real estate companies. Read more in About.
