Category: SEC

This Really Comes as No Surprise But We Feel Obligated to Ask for Your Help

Thumbnail image for Thumbnail image for 140px-United_States_Securities_and_Exchange_Commission.pngMore good news about your tax dollars at work. This time courtesy of the punching bag of government agencies:
More, after the jump

According to reports, an audit conducted by an outside firm found that the SEC’s acquisitions office failed to maintain accurate records on its contract and procurement activities, and reported data that was inaccurate to the federal procurement database.
In one glaring example, the regulator could not supply the auditor with data about all of the contracting activities from the SEC’s regional offices.

Good Lord. Recently laid off peeps, please do your country a bit of service and help out the complete f*(king nightmare that is our government. We implore you.

Accounting Professors Aren’t Waiting for Bureaucrats to Get Their Act Together

graduation.jpgEven though the convergence of IFRS and U.S. GAAP seems like a DeLorean ride away accounting professors polled believe that it should be included in the curriculum, according to Web CPA:
More, after the jump

The survey, by KPMG and the American Accounting Association, found that half of the professors who responded to the survey said they thought a low sense of urgency exists among U.S. regulators to adopt IFRS by a “date certain,” while only 16 percent believe regulators have a high sense of urgency.

Regardless of academics’ pessimism about the SEC getting their shit together and making this marriage of accounting rules happen, the slow integration into the American curriculum is still occurring:

Despite this challenge, 70 percent said they have taken significant steps to incorporate IFRS into the curriculum. In addition, 83 percent believe IFRS needs to be incorporated into their curricula by 2011…Given the dynamics of the current regulatory environment, 79 percent of faculty believe that U.S. GAAP should continue to be taught over the next three to five years, while progressively incorporating more IFRS concepts via a compare-and-contrast approach as the conversion date approaches.

A majority of the respondents to the survey also expect IFRS to be included in the CPA Exam by 2012/2013 and in intermediate accounting textbooks by 2011/2012.
For those of you still cracking the books, discuss if your profs have brought this up and what kind of priority they’re putting on IFRS. We’re not holding our breath for anything meaningful from TPTB.
Accounting Professors Urge IFRS Education [Web CPA]

Mail Order Porn Is Not a Red Flag at the SEC

discreet-packaging.gifThe latest Ponzi scheme busted by the new and improved SEC just reminds us that the Commission is rarely chasing after criminal masterminds and thus, has a long way to go before we’re going to be impressed with their efforts:
Continued, after the jump

The SEC alleges that Philip G. Barry and his firms Leverage Group, Leverage Option Management Co., Inc, and North American Financial Services defrauded investors, including senior citizens and retirees, by selling securities in Leverage investment funds….According to the Commission’s complaint, Barry spent the money by purchasing real estate in his own name and those of other entities he controlled, paying expenses of a separate mail order business that sold pornographic materials, and supporting his lifestyle.

Mail order porn? What century is this guy living in? Did he also churn his own butter and crank start his car? We understand that certain forms of entertainment are best appreciated when tangible and we do like getting pleasant surprises in the mail but porn in the mail?
This guy started ripping off senior citizens in 1999. Since porn was on the web pretty much from the get-go we’re pretty sure that the mail order stuff was at falling out of favor by this time. Nevertheless, it appears that no one at the Commission was aware that hot action was available on the web for the past ten years and more advanced training may be needed.
SEC Charges New York-Based Money Manager in $40 Million Ponzi Scheme [SEC.gov]

Depantsing Day for the SEC

cox.jpgIn the biggest shocker of the day, the inspector general of the SEC reports that the Commission never undertook a ‘thorough and competent’ investigation into Bernie Madoff’s operations.
This seems to be the official “our bad” statement by the SEC, although Chris Cox didn’t waste any time throwing worker bees under the bus, “Days after the conman’s arrest, the SEC’s then-chairman, Christopher Cox, faulted the agency’s staff for failing to act on ‘credible and specific allegations’ about the operation for at least a decade.”
More, after the jump


Harry Markopolos was soiling himself the whole time and no one bothered to listen probably because you called country club rules when you took the big chair, C-squared. Call us Monday morning QB but if some guy called us up with dirty undies screaming about the biggest fraud in history, we’re pretty sure we’d take him seriously.
Anyhoo, it’s all water near a bridge now. Schape and Co. are kicking ass and taking their sweet time naming key positions, so we’re sure that everything will be hunky-dory from here on out.
SEC Never Took ‘Competent’ Look at Madoff’s Firm, Report Finds [Bloomberg]
UPDATE: Check out more of the SEC sucking over at our sister site, Dealbreaker.

The SEC Awkwardly Reasserts its Authority

mschape.jpgThe SEC, having lost every shred of dignity it once had, is kindly reminding everyone that they are the authority on accounting rules. It sounds like the Commission is concerned that some of you might be a little confused by the new FASB Codification and just wanted to put it out there that M. Schape and crew are still the ones in charge.
Forget about any possibility of a bean counter coup that would upend the accounting rule universe. It’s not happening on Mary Schapiro’s watch.
Nevermind that it took the better part of a year to get a Chief Accountant officially appointed. The Commission was probably worried that, with all the hubbub, people may have lost some perspective, that’s all. The SEC, could torpedo this whole Codification nonsense back to the stone age, if it wanted to. Just wanted to remind everyone. Thanks.
SEC Clarifies Authority Over Accounting Rules [Compliance Week]

Apparently There Was No Rush on the Naming of the Chief Accountant

mary_schapiro_1218.jpgIt’s nearly September and Mary Schapiro has finally gotten around to naming a Chief Accountant. It’s been a busy 7-8 months, and with Ponzi schemes popping up out of nowhere and Steve Job’s liver, sometimes getting appointments made can’t be squeezed in.
James Kroeker, a former partner and Deloitte gets the honor of whatever it is the OCA actually does. Oh wait:
More, after the jump

Kroeker, who has held the job on an interim basis since January, would be responsible for interpreting rules requiring companies to disclose their financial health to shareholders. If named, he would referee disputes between banks and investors over writedowns for assets that lost value during the recession.

That’s it? This will be a breeze. Get crackin’ Jimmy. You’re got eight official months to get caught up on.
SEC’s Schapiro Said to Name Kroeker as Agency’s Top Accountant [Bloomberg]

The SEC Doesn’t Care if ‘The Numbers Don’t Work’

magic money.jpgTry to control yourselves, the SEC continues to kick some ass. The Commission has charged Terex Corporation of Westport, CT with accounting fraud:
Check out the details, after the jump

The Securities and Exchange Commission today charged Terex Corporation, a Westport, Conn.-based heavy equipment manufacturer, with accounting fraud for making material misstatements in its own financial reports to investors, as well as aiding and abetting a fraudulent accounting scheme at United Rentals, Inc. (URI), another Connecticut-based public company.

The Commission had previously charged URI executives with fraud back in September when the company paid $14 mil to settle with M. Schape and the gang. Terex is settling for $8 mil.
The complaint alleges that both companies engaged in some shady revenue recognition which enabled them to meet earnings forecasts. It also states that from 2000 to 2004, accountants at Terex couldn’t figure out some of their inter-company transactions so they just decided to RAM some journal entries in there to make it work.
We understand that. Every once in awhile it’s 1 am-ish and you’re looking at a bunch of numbers that are getting blurry and you say “F THIS“. Entry gets made. Done.
Problem is, the SEC doesn’t like that.
SEC Charges Terex Corporation With Accounting Fraud [SEC.gov]

SEC Doesn’t Care Who it Has to Hurt to Get Respect Again

mary_schapiro_1218.jpgAfter everything the SEC has been through, you might expect some government bureaucracies to wither and die at the hands of some irate congressional committee (ahem, Financial Services).
Not the Commission. No, the SEC has HAD IT with everybody’s Monday morning quarterbacking and is going to start kicking ass and taking names.
And they’re going to start by aggressively interpreting the clawback provisions in Sarbanes Oxley. Sounds incredibly snoozerific, we realize, but in the past the Commission has only gone after the bonuses of the actual scofflaws.
The new SEC has decided that it’s going to try and clawback the bonuses and performance-based pay back from those who knew squat about the fraud and just cashed checks.

Last week, the regulator asked a court to order the return of $4m (€2.82m, £2.43m) paid to Maynard Jenkins, former chief executive of CSK Auto, whose profits were allegedly inflated by accounting fraud committed by others: Mr Jenkins was not involved.

We especially feel bad for the guy being made to be an example at the hands of the SEC. The House of Schape/Cox has been the joke of the establishment for months so the Commission figures that if it has to make a few people miserable while they crawl their way back to semi-respectability, it’s a small price to pay.
‘Clawback’ marks tougher SEC stance [FT.com]

The SEC Knew Who Allen Stanford was Before 2009, Thankyouverymuch

stanford10.jpgThe SEC would like everyone to know that it was “actively investigating” Stan the Man “well before the multibillion-dollar fraud by Bernard Madoff was revealed” but was “hampered by a lack of cooperation” from the Gun Show.
The investigation started back in 2005 but the SEC decided it wasn’t really time to get serious with Stan until after the whole Madoff SNAFU broke. So it sounds like from 2005 to late 2008, the “actively investigating” consisted of the following:
SEC: Hi. Are you running a Ponzi scheme?
Stan: I’ll die and go to hell if it’s a Ponzi Scheme
SEC: Good enough for us. Thanks for your help.
Give the SEC a break people. They were really trying on this one.
Stanford Hampered SEC Probe [WSJ]