Bank of America

Enron settlement a victory for shareholders?

Jim Kim — Thu, 11 Sep 2008 07:51:47 -0400

Believe it or not, Enron is still making news, the latest of which is good for many shareholders. A judge has approved a $7.2 billion settlement that will provide funds for those who purchased Enron stock between Sept. 9, 1997 and Dec. 2, 2001, the day the company went bankrupt. That ranks as the largest private securities class action settlement ever. The big winners are institutional shareholders. The University of California was the lead plaintiff. Law firm Coughlin Stoia Geller Rudman & Robbins will make $688 million plus interest for its work on the case, which started in 2001. The bulk of the funds will come from JPMorgan Chase, Citigroup and the Canadian Imperial Bank of Commerce. Smaller amounts came from Bank of America; Lehman Brothers; former Big Five auditing firm Arthur Andersen and its defunct global umbrella organization, Andersen Worldwide, reports the Houston Chronicle. So is it over? Well, Jeff Skilling's appeal is still out there.

For more:
- here's the Chronicle article

Countrywide on the hot seat

Tue, 13 May 2008 06:59:59 -0400

Countrywide has no choice but to promise to do better. As the people increasingly question the wisdom of Bank of America's plans to purchase it, it faces criticism in other areas that get to internal control issues. At a congressional hearing, the mortgage giant said it will hire an independent auditor to review its treatment of loans whose borrowers have filed for bankruptcy and review claims of borrower abuse. It also will adopt a series of "best practices" issued by a national group of bankruptcy trustees. An interesting question: Is this a Sarbanes-Oxley issue? On one hand, the issue of abusive fees feeds revenue, which might bring it in-scope. You have to wonder how the auditor's assessed the issue. KPMG is its. As you recall, it took its lumps over the New Century implosion.

For more:
- here's some background from Dow Jones via CNNmoney.com

Prosecutors notch a Sarbox conviction

Mon, 02 Apr 2007 20:01:39 -0400

When you're stuck in the gears of Sarbanes-Oxley compliance, it's sometimes hard to recall what the law was all about. The point was not to generate additional audit work and lots of headaches but rather to prevent--and accordingly deter--fraud. For all the outcry over corporate fraud, there have only been three people charged under Sarbox. The most recent case: Steven Garfinkel of Philadelphia, who was CFO for the now-defunct DVI, pleaded guilty to directing DVI employees to falsify documents and double-list assets to get bigger credits. The crime triggered a $50 million loss to Fleet Bank, which has since been bought by Bank of America. Garfinkel, 64, was given 30 months in federal prison and ordered to pay restitution of $51 million, which he can pay $200 (per month) at a time.

For more:
- here's an update from the Philadelphia Inquirer

CFOs want out fast

Mon, 05 Feb 2007 19:01:39 -0500

Sallie Krawcheck of Citigroup and Alvaro De Molina of Bank of America are hardly the only CFOs who wanted out. Last year, 12 Fortune 50 CFOs opted to quit, and few would be surprised if the trend held for 2007. The issue is how much Sarbanes-Oxley had to do with it. By one account, because of Sarbox, CFOs now spend about one-third of their time on IT systems, paperwork, and board issues (often questions). What's lost is the "big picture" focus that often paved the way for CFOs to ascend to CEO. At the same, shareholder issues--which often are related somehow to Sarbox--have become more vexing. So the bottom line is that the job is now much more task and process oriented, with a lot of risk and little reward, in the words of De Molina. Some companies are adding chief accounting officers to ease the burden, which is a good move. Adding a chief compliance officer might also be wise. Both should report to the CFO.

For more:
- here's a Fortune article

Related Articles:
Should CFOs be stripped of all stock options? Report
The churn begins, turnover high for CFOs. Report

Clarity on Sarbox whistleblower provision much needed

Mon, 12 Jun 2006 20:01:33 -0400

To what extent does Sarbox protect whistleblowers? It's still not clear, and the issue just got murkier thanks to the Supreme Court. The high court recently held that whistleblowing by public employees is not protected by the First Amendment and may be grounds for discipline. Some say this is a significant precedent for private employers and many employers would certainly benefit from some clarity on this issue. A former broker at Bank of America recently publicized some dubious practices, then raised eyebrows by seeking Sarbox protection even though the alleged wrong-doing was not related to accounting.

> Here's an article from accountingweb.com.
> Here's a story about a Wal-Mart whistleblower and Sarbox. Article