MCI

Another Fair Fund distribution sent; more to come?

Jim Kim — Mon, 23 Jun 2008 08:49:13 -0400

Recall that the Sarbanes-Oxley Act gave the Securities and Exchange Commission the authority to distribute the fines it collects from law-breaking companies to aggrieved investors. Since then, nearly $4 billion has been distributed, stemming from cases involving MCI, Enron, Qwest and others. Dow Jones, via CNNMoney.com, reports that another distribution is now underway. The SEC has sent more than $103 million to 130,000 people and 380 mutual funds that lost money because of market timing and late trading by Banc of America Capital Management and its affiliates. This is the first of several that will ultimately reimburse more than 1.5 million investors and 525 funds. We may see more distributions from mutual fund abuse cases.

For more:
- here's the Dow Jones article

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More fraud, smaller penalties

Business schools hire ex-cons

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

In the Sarbanes-Oxley era, we should not be surprised that business schools are trying to scare their students straight. Top schools are hiring convicted felons to speak to students about their experiences, according to Business Week Online. Walter A. Pavlo Jr. has a thriving second career as a speaker. He talks about his time at MCI, where he devised a money laundering scheme that landed him in jail for two years, and at his parents' house after that. Will this make a difference? Well, I'm not sure if we can eradicate corporate crime, but the stakes are higher--in part because of Sarbanes-Oxley. It's harder than ever to get away with fraud. But there will always be those who try.

For more:
- here's the Business Week Online article

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One way to profit after compliance lapses

Tue, 01 Apr 2008 07:59:59 -0400

"... You can't legislate ethical behavior." So says Walter Pavlo Jr., who was jailed for embezzling $6 million from MCI in 2001. What does he do know? Why he's on the speaking circuit of course. For a fee, he'll recount how he faced a lot of pressure to get some debts off the books of MCI, which lead him down the slippery slope to prison. The more illegal stuff he did, the more he was accepted, notes the Pittsburgh Tribune Review. We have to ask in light of the mortgage fraud cases we're now seeing whether anything has changed. Sarbanes-Oxley was the right idea, but it cannot reign in human behavior. There will always be cheats. Hopefully, the pressure for executives and auditors has been lessened a bit.

For more:
- here's the article from the Pittsburgh Tribune Review