In what is being reported as a crushing defeat for federal prosecutors, HealthSouth Corp.'s CEO Richard Scrushy was found not guilty of orchestrating a 2.7 billion dollar accounting fraud at the company.
Coming on the heels of the conviction of Bernie Ebbers, the verdict may have an impact on future decisions for these high profile cases. Given the fact that some news services are reporting that Ebbers might get a sentence of 85 years, someone needs to seriously reconsider these prosecutions.
Tuesday, June 28, 2005
Friday, June 17, 2005
Former Tyco chiefs found guilty
Before anyone gets too excited about AG Spitzer's recent loss, Former Tyco International Ltd. Chief Executive Dennis Kozlowski and finance chief Mark Swartz were found guilty on Friday of stealing more than $150 million, giving prosecutors pursuing the recent wave of corporate scandals one of their biggest victories to date.
Former Tyco chiefs found guilty - Yahoo! News
Former Tyco chiefs found guilty - Yahoo! News
Wednesday, June 15, 2005
JPMorgan to pay $2.2 billion in Enron Settlement
Now the other shoe drops. The Number 3 US bank just announced its settlement with investors of Enron - 2.2 billion dollars. Last week Citigroup agreed to pay 2 billion dollars.
The lead plaintiff in the case is the Board of Regents of the University of California who sued a number of financial firms. So far financial institutions have agreed to pay Enron shareholders $4.7 billion. In addition to the Citigroup and JP Morgan settlements, Bank of America has agreed to pay $69 million and Lehman Brothers paid $222.5 million.
The other financial institutions still involved include Barclays Plc, Credit Suisse First Boston, Merrill Lynch, Canadian Imperial Bank of Commerce, Toronto Dominion Bank, Royal Bank of Canada, Deutsche Bank AG and the Royal Bank of Scotland. The plaintiff are expecting settlements to reach 7 billion dollars.
JPMorgan Read the original article
The lead plaintiff in the case is the Board of Regents of the University of California who sued a number of financial firms. So far financial institutions have agreed to pay Enron shareholders $4.7 billion. In addition to the Citigroup and JP Morgan settlements, Bank of America has agreed to pay $69 million and Lehman Brothers paid $222.5 million.
The other financial institutions still involved include Barclays Plc, Credit Suisse First Boston, Merrill Lynch, Canadian Imperial Bank of Commerce, Toronto Dominion Bank, Royal Bank of Canada, Deutsche Bank AG and the Royal Bank of Scotland. The plaintiff are expecting settlements to reach 7 billion dollars.
JPMorgan Read the original article
Tuesday, June 14, 2005
Maybe Spitzer's Cape Was Too Big - New York Times
While "Masters of the Universe cower in a corner" Theodore Sihpol took on Elliot Spitzer, and won. As mentioned here last week, the loss was a crushing blow for Spitzer, who seems to do better beating settlements out of people than actually taking cases to trial.
The Siphol trial was actually the first time Spitzer's office had tried any type of financial fraud case, and he lost. One has to wonder what the other six defendants who settled in the case are thinking now.
It takes a good case to decide to defend these types of cases, but it also takes a defendant with some nerve, and an attorney with some guts. It's always easier to settle a case, but the only way overzealous prosecutors are going to be reigned in is by taking them to trial with the cases that should go to trial.
Spitzer's tactics are now being called into question, and rightfully so. While he has done some theoretical good in the research area, did he really do anything for investors? All of those headlines and big fines - but the money went to Spitzer's office and the other Attorneys General. Investors did not see a dime of that money, and Spitzer even let the firms settle without admitting guilt, leaving investors with no money, and no assistance in proving their own individual cases.
We had another prosecutor like this years ago - big splashy headlines, perp walks for the press, over the top press releases; and no substance.
But sometimes it works. That former prosecutor was Rudy Giuliani. Mr. Giuliani actually had a terrible record as a prosecutor, but made great headlines. As it turned out, he became a great mayor but that might simply have been timing.
Spitzer will undoubtedly make a great run for the governorship of New York, but his record as a prosecutor is quickly being called into question.
Maybe it will not make a difference in the long run, but in the short term, Mr. Sihpol has shown us that Spitzer may not be as good as his press.
You will need to register with the NYT to read the article, but it is worth the few minutes.
The Siphol trial was actually the first time Spitzer's office had tried any type of financial fraud case, and he lost. One has to wonder what the other six defendants who settled in the case are thinking now.
It takes a good case to decide to defend these types of cases, but it also takes a defendant with some nerve, and an attorney with some guts. It's always easier to settle a case, but the only way overzealous prosecutors are going to be reigned in is by taking them to trial with the cases that should go to trial.
Spitzer's tactics are now being called into question, and rightfully so. While he has done some theoretical good in the research area, did he really do anything for investors? All of those headlines and big fines - but the money went to Spitzer's office and the other Attorneys General. Investors did not see a dime of that money, and Spitzer even let the firms settle without admitting guilt, leaving investors with no money, and no assistance in proving their own individual cases.
We had another prosecutor like this years ago - big splashy headlines, perp walks for the press, over the top press releases; and no substance.
But sometimes it works. That former prosecutor was Rudy Giuliani. Mr. Giuliani actually had a terrible record as a prosecutor, but made great headlines. As it turned out, he became a great mayor but that might simply have been timing.
Spitzer will undoubtedly make a great run for the governorship of New York, but his record as a prosecutor is quickly being called into question.
Maybe it will not make a difference in the long run, but in the short term, Mr. Sihpol has shown us that Spitzer may not be as good as his press.
You will need to register with the NYT to read the article, but it is worth the few minutes.
Not a Member of the Club - - MSNBC.com
Newsweek's analysis of Wall Street's views of Christopher Cox as the new SEC Chairman.
Monday, June 13, 2005
Morgan Stanley fires CEO Purcell -CNBC
Reuter's reports that Philip Purcell has been fired, but will stay on until a replacement is found.
UPDATE 9:00AM - now Reuters is reporting that Mr. Purcell is resigning. At 7:53AM they were reporting that he was fired.
UPDATE 9:00AM - now Reuters is reporting that Mr. Purcell is resigning. At 7:53AM they were reporting that he was fired.
Friday, June 10, 2005
Citigroup to Settle Enron Lawsuit for $2B
Citigroup will pay $2 billion to settle a class-action lawsuit over its role in the the Enron debacle that led to the energy trader's collapse.
According to the Associated Press, the settlement marks the largest payout so far pledged to Enron investors, who claim they were bilked out of billions of dollars when the energy company went bankrupt in 2001. It also becomes one of the largest corporate settlements in history, but still below the $2.58 billion that New York-based Citigroup agreed to pay WorldCom Inc. investors last year.
According to the Associated Press, the settlement marks the largest payout so far pledged to Enron investors, who claim they were bilked out of billions of dollars when the energy company went bankrupt in 2001. It also becomes one of the largest corporate settlements in history, but still below the $2.58 billion that New York-based Citigroup agreed to pay WorldCom Inc. investors last year.
Thursday, June 9, 2005
Broker Found Not Guilty In Spitzer's Late Trading Case
In a crushing defeat for NY Attorney General Elliot Spitzer, a New York jury found Theodore Sihpol not guilty on charges of late trading in mutual funds.
While the late trading of mutual funds has been assumed by many to be illegal, as I have noted before, that is not necessarily true. Even so, this verdict does not mean that it is legal, it simply means that this jury did not find this defendant guilty.
What is interesting about the verdict is some of the jury's comments as reported in the Wall Street Journal. Those comments, which included calling Mr. Sihpol a "scapegoat" and a "fall guy" provide an interesting commentary on Mr. Spitzer's tactics of settling with the "big guys" and using them to go after the little fish.
Sihpol was accused of helping Canary Capital Partners make mutual fund trades after the market closed. Canary Capital paid $40 million to settle charges. Spitzer's office then used the former head of Canary Capital, Edward Stern, and another Canary Capital executive, Noah Lerner, to testify against Mr. Sihpol.
One would think that the securities prosecutors would learn what criminal prosecutors have known for decades - you cannot settle with the primary violator and attempt to use their testimony against underlyings. That has backfired a number of times.
Jurors do not appreciate the tactic, and the Sihpol case demonstrates it clearly. Jurors reportedly said that they did not believe the Canary executives, and in addition to the scapegoat comments, the WSJ is reporting that the jury forewoman hugged Mr. Sihpol's wife and shook hands with his attorney.
Those actions speak volumes about the juror's feelings toward the defendant; and the prosecution.
While the late trading of mutual funds has been assumed by many to be illegal, as I have noted before, that is not necessarily true. Even so, this verdict does not mean that it is legal, it simply means that this jury did not find this defendant guilty.
What is interesting about the verdict is some of the jury's comments as reported in the Wall Street Journal. Those comments, which included calling Mr. Sihpol a "scapegoat" and a "fall guy" provide an interesting commentary on Mr. Spitzer's tactics of settling with the "big guys" and using them to go after the little fish.
Sihpol was accused of helping Canary Capital Partners make mutual fund trades after the market closed. Canary Capital paid $40 million to settle charges. Spitzer's office then used the former head of Canary Capital, Edward Stern, and another Canary Capital executive, Noah Lerner, to testify against Mr. Sihpol.
One would think that the securities prosecutors would learn what criminal prosecutors have known for decades - you cannot settle with the primary violator and attempt to use their testimony against underlyings. That has backfired a number of times.
Jurors do not appreciate the tactic, and the Sihpol case demonstrates it clearly. Jurors reportedly said that they did not believe the Canary executives, and in addition to the scapegoat comments, the WSJ is reporting that the jury forewoman hugged Mr. Sihpol's wife and shook hands with his attorney.
Those actions speak volumes about the juror's feelings toward the defendant; and the prosecution.
Morgan Stanley's General Counsel To Resign
It was bound to happen. Donald G. Kempf is stepping down as Morgan Stanley's General Counsel. The NYT is putting the blame on him for Morgan's recent legal problems, and more importantly, its poor relationship with regulators.
Monday, June 6, 2005
Lawyers Weigh In on SEC Nominee
The defense bar thinks he is great, the plaintiff's bar has its doubts. Lawyers Weigh In on SEC Nominee
Thursday, June 2, 2005
Bush selects Cox to head U.S. SEC
Supposedly a supporter of big business, California Rep. Christopher Cox will be the next Chairman of the Securities and Exchange CommissionBush selects Cox to head U.S. SEC - Yahoo! News
SEC Chairman Donaldson Resigns
The Associated Press was very kind in its assessment of his tenure, we will have to wait and see what happens now that President Bush gets to appoint yet another Chairman
SEC Chairman Donaldson Resigns
SEC Chairman Donaldson Resigns
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