Legal, negotiation and tax counsel for business

U.S. accounting standards setting is truly out of control. Despite the constant drumbeat from special interests — mostly analysts and retirement plans who demand ever-increasing complexity and sophistication in accounting standards — what we get in the form of new accounting pronouncements in this country is largely indecipherable geek-speak. [Read more →]

When it comes to understanding the rationale of board or committee decisions and holding board members accountable, nothing beats a video or audio recording of the meeting. Meeting minutes, by contrast, are notorious for doing more to obfuscate and obscure than inform. [Read more →]

Today, a three-judge panel of the D.C. Circuit Court of Appeals handed down a much-anticipated 2-1 decision in Free Enterprise Fund v. PCAOB.  The panel, in my view, reached the wrong conclusion, holding in essence that the PCAOB can rule over the world of U.S. accounting and auditing while immune from constitutional checks and balances.  The crowning irony is that the PCAOB, supposedly designed to promote accountability, is itself so unaccountable for its actions.

Likely, the case will be reheard en banc and/or decided by the Supreme Court.  Meanwhile, the best, most coherent reading is found in Judge Kavanaugh’s eloquent 57-page dissent: [Read more →]

Well, not really. But you’d think, based on the SEC’s virulent reaction to the decline in banking stocks, they or the Treasury or DOJ or somebody would act to protect oil investors, as well.  These poor souls lost another $4 per barrel on Tuesday. But maybe not all investors are created equal after all. If you invest in oil and get caught in the market whipsaw, you deserve to lose money. Or maybe if you short-sell oil futures, you deserve to make it.  Either way, the government’s response to the crisis in mortgage banking seems dysfunctionally two-faced.

Atul Malhotra, former VP of imaging and printing services at Hewlett Packard (HP) pleaded guilty today to stealing trade secrets in a joint prosecution by federal and California authorities. Federal trade secrets prosecutions are relatively rare but — like most federal white collar crimes — they bring a super-sized penalty. [Read more →]

Société Générale has been treated to all kinds of abuse for recognizing in 2007 Jerome Kerviel losses incurred just over year-end cutoff, in 2008. Floyd Norris has been especially critical of the French bank’s use of the “true and fair view” exception which he calls an IFRS “loophole.”

Well, as they say, what goes around comes around. In the Alice-in-Wonderland world of financial reporting standards setting, the current U.S. financial accounting standards-setter (the FASB) is on the verge of effectively ratifying SocGen’s 2007 treatment of those Kerviel losses. This ratification comes in the form of an Exposure Draft — for lay readers, an “ED” is a draft of a new accounting standard — on the Disclosure of Certain Losses and Contingencies. More on that below. [Read more →]

Before he died, in 1960, Earl Long managed to serve three times as Governor of Louisiana and — despite widely acknowledged corruption — not a day in prison. In the context of today’s plague of litigation and over-zealous white collar prosecution, some might find helpful this advice of Governor Long:

Don’t write anything you can phone. Don’t phone anything you can talk. Don’t talk anything you can whisper. Don’t whisper anything you can smile. Don’t smile anything you can nod. Don’t nod anything you can wink.

A June 26 NPR report confirms suspicions I first expressed on June 20 that the Bear Stearns indictments distort facts, casting them in the most unfavorable light possible. I’ve reached the point in reading indictments that I disbelieve 90 percent of what they contain. A disturbing percentage of prosecutors are either blantant liars (maybe trained by Worldcom accountants?) or they go off half-cocked, substantially lacking essential context.

Who to blame? Mothers, professors, law schools? Hard to say, but one thing’s sure: they have a huge credibility problem. [Read more →]

The U.S. Supreme Court today struck down the District of Columbia’s ban on handguns. The Oyez Project has graciously posted a printed transcript and MP3 audio of the March 18 oral arguments in the case.

The securities law blogosphere has been bubbling with speculation — since the April 15 oral arguments in Free Enterprise Fund, et al. v. PCAOB — over how the D.C. Circuit Court might rule in the case. It is possible that the PCAOB and SOX could disappear in a cloud of appellate ink before summer’s end. Some observers, including the Washington Legal Foundation, believe it’s high time: [Read more →]