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Ebbers Advances the “Honest-but-Ignorant CEO” Defense, Too
In the Jan. 5 post "The ‘Honest-but-Ignorant’ CEO Defense" that discusses the likely defense that will be offered by Ken Lay (Enron) and Richard Scrushy (HealthSouth), I neglected to include Bernie Ebbers to the list of former CEOs who will argue that they relied on subordinates to handle accounting issues. Ebbers, the former CEO of
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Plea Deal in Healthcare Fraud Case
A high-profile prosecution of a hospital, its former CEO, and an associate administrator got a jolt when the associate administrator, Mina Nazaryan, agreed to plead guilty on Jan. 5 as the trial is in its second month (see AP story). Nazaryan was charged with demanding kickbacks from three doctors for arranging employment for them at
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Protecting Internal Investigation Reports
There has been a major fight between McKesson Corp. and counsel for shareholder plaintiffs suing the company for securities fraud and various state law fiduciary duty violations over the contents of the company’s internal investigation report. The plaintiffs won the right to review the report in a California Court of Appeals decision, McKesson HBOC v.
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Tracing the Rebate Checks from Brokers
An article in the Wall Street Journal (Jan. 6) discusses a new phase in the SEC’s ongoing investigation of conflicts of interest in the capital markets. According to the article: The Securities and Exchange Commission has launched a broad examination of whether managers of big mutual funds and hedge funds are pocketing rebates on stock-trading
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The “Honest-but-Ignorant” CEO Defense
A front-page article in the Wall Street Journal (Jan. 5) gives a nice overview of the government’s prosecution of Ken Lay, the twice-former CEO of Enron. According to the article, and any number of statements by Lay, his defense at trial will be that he was ignorant of the wrongdoing occurring at Enron, and that
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Split Verdict in Cendant Prosecution
The securities fraud, mail/wire fraud, and conspiracy trial of former Cendant CEO Walter Forbes and former vice-chairman Kirk Shelton ended in a split verdict on Jan. 4: Shelton guilty on all 12 counts, and a hung jury on the charges against Forbes. According to a New York Times story (Jan. 5),the jury deliberated for 33
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SEC Files Civil Fraud Charges Against TV Azteca and Officers
A post here on Nov. 22 (Lawyer Reporting of Corporate Misconduct) discussed the role of two U.S. law firms that advised their client, TV Azteca, regarding the company’s disclosure obligations under the federal securities laws and, when the corporate client refused to make the disclosures, the lawyers resigned. The SEC has now charged TV Azteca,
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Former Federated Department Stores CEO Charged with Perjury
New York Attorney General Eliot Spitzer’s office announced on Jan. 4 that it had secured the indictment of former Federated Department Stores CEO James Zimmerman for perjury during a deposition conducted by the AG’s office into possible antitrust violations in the distribution of tableware in New York City stores. According to a press release issued
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Former FBI Agent Testifies in His Own Defense
One of our earliest posts (Nov. 2 here) discussed the beginning of the securities fraud and market manipulation trial of Anthony Elgindy and former FBI Agent Jeffrey Royer. Among other things, Royer is accused of feeding confidential information to Elgindy about companies being investigated by the FBI and SEC, which Elgindy used to short the
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Channel Stuffing at Krispy Kreme?
An AP article (Jan. 4) discusses a shareholder lawsuit accusing Krispy Kreme and its management of engaging in the age-old accounting practice known as channel stuffing, in which a company sends out large amounts of its wares at the end of the quarter to increase its revenue for that period. With Krispy Kreme as the
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