Citigroup appears to have even less of a claim on Wachovia than I previously thought, on the basis of transaction documents posted late Sunday night by the New York Times (copy below the jump). The documents include an affidavit of Wachovia CEO Robert Steele and the Wachovia-Wells Fargo merger agreement. It appears, from these documents and others filed earlier by Citigroup, that if there’s a bad corporate citizen in this game, it’s Citigroup. [click to continue...]
From the category archives:
Whistleblowing
Yesterday, the SEC charged former Kellogg, Brown & Root, Inc. (KBR) executive Albert Jackson Stanley with participating in a “scheme” to win more than $6 billion in construction contracts by bribing Nigerian government officials. According to the SEC, “The contracts were awarded to a four-company joint venture of which The M.W. Kellogg Company, and later KBR, was a member.
The SEC’s complaint in the case — filed at Houston, in the U.S. District Court for the Southern District of Texas — can be accessed here and the SEC’s press release, here. [click to continue...]
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.
The Wall Street Journal reports today that a Florida medical-imaging center operator will pay $7 million to settle accusations that it billed CT scans not performed and offered doctors kickbacks for patient referrals. The radiologist whistleblower in the case, David Clayman, will receive $1.75 million for his efforts in the case.
The SocGen debate continues. Thanks to Gaute Solheim who commented yesterday as follows:
[Quoting Kurt Schulzke]: “The gains and losses were all a single product of the rogue behavior of a single trader who was discovered and ushered out of the company very early in 2008.”
I am not able to follow your logic here. If the rogue behaviour had resulted in record gains in early 2008, and he had been ushered out of the company for trading outside his limits, would it then be more “true and fair” to put all the gains from all the different trades he did in the 2007 result since they were “a single product”?
I have a hard time figuring out where in the IFRS a persons intent for “rogue behaviour” is treated as a cause to bundle together independent trades that otherwise would be handled independently. As you understand I am not convinced yet.
I do agree with you that IFRS is a step in the right direction, but I still suspect that SG stepped out of line here.
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Sumter, South Carolina orthopedic surgeon Michael Drakeford’s qui tam suit — originally filed in 2005 against Tuomey Regional Medical Center — is moving forward, according to recent reports by The State.com and Modern Healthcare Online. Dr. Drakeford was the original plaintiff. However, as is typical in whistleblower cases, the U.S. Justice Department has “intervened” as lead plaintiff. The DOJ’s intervention greatly increases the likelihood of a payment by Tuomey through settlement or trial. This is good news for Drakeford who as the qui tam plaintiff stands to win between 15 and 25 percent of any recovery from Tuomey. [click to continue...]
Today, attorney William Lerach was sentenced to two years in the federal pen for obstructing justice and making false statements. He once won a $7 billion judgment against Enron for . . . (drum roll) making false statements. It’s a classic example of what I call the “savvy guy syndrome,” a behavioral disorder in which an individual or a group follows the lead of so-called “savvy guys” right over the edge of legal or ethical cliffs.
The case of French bank Société Générale, in which a single trader’s off-the-reservation trades cost the bank €4.9 billion ($7.2 billion), highlights a systemic control weakness in global financial markets. No system of regulation, operated from outside and above individual companies can be expected to corral determined fraudsters on a timely basis.
Friday’s Wall Street Journal quotes Charles Goodhart, program director of regulation and financial stability at the London School of Economics, for the proposition that regulators should “provide incentives for people working with the fraudster to catch the fraud.”
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The corporate defense bar should be smiling today. Yesterday, the U.S. Supreme Court declined to make it easier — not the same as “made it harder,” as some commentators may claim — for investors to get relief in federal securities fraud cases. In its 5-3 decision in Stoneridge Investment Partners v. Scientific-Atlanta, Inc., the Court [click to continue...]
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