On Wednesday we reported that McGladrey's Great Lakes leader David Shane was leaving the firm. It seemed a little unexpected given the fact that the announcement was on Monday and Shane would gone on August 15th, but a commenter reminded us of a story we reported on a couple of years ago:
Perhaps unrelated to his departure, but CFTC.gov shows he was named in the One World Capital audit failure a few years ago and had to pay a fine personally (the firm could not pay it for him). McGladrey had issued a clean audit opinion on a client with misstated financials.
Of course! I completely forgot about One World Capital! McGladrey was fined $900k and Mr. Shane was fined $100k. Here's what we highlighted from the CFTC press release at the time, in September 2011:
[T]he order finds that One World’s 2006 financial statements were materially misstated in various ways including: (1) the 2006 Statement of Financial Condition states that liabilities payable to all customers were over $6.9 million, when in fact information available in One World’s records showed that it may have owed at least $15 million just to forex customers alone, for whom One World served as the counterparty; and (2) the 2006 financial statements materially misstated the nature of One World’s business by failing to reflect that One World served as the counter party to its forex customers for over 90 percent of its business, according to the order.In addition, McGladrey failed to report material inadequacies in One World’s accounting system and internal accounting controls, including the lack of a customer ledger, and an accounting system that did not properly identify the number of forex customers or the amount of customer liabilities, according to the order. These material inadequacies reasonably could, and did, lead to material misstatements in One World’s 2006 financial statements, the order finds.
Or there's another possibility, as the commenter suggests:
But maybe he just wanted to retire from public accounting. More power to him.
Right! Also plausible!
A McGladrey spokeswoman declined to comment, so this is what we've got to go on. As you were.
Earlier:
McGladrey's Great Lakes Leader Is Gonna Take Off Now
Even earlier:
CFTC Didn't Think Too Much of McGladrey's Audit of One World Capital Group
