Going Concern

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FASB Overseers Hope That Motley Crue-ish Tour Will Help Win Some Fans Back

Caleb Newquist
June 24, 2009

Motley Crue.JPG The Financial Accounting Foundation (“FAF”) trustees are going on a tour that will certainly rival the amount of groupie tail that Motley Crue was getting circa late 80s.
“The Financial Accounting Foundation trustees, who oversee the U.S. Financial Accounting Standards Board (FASB), will meet with small closed discussion groups of investors, auditors, academics and regulators in New York, Dallas, San Francisco, Chicago and Washington, D.C., as well as with the FASB’s standing advisory groups.”
It’s pretty clear that the FAF has the intention of spreading their ~~seed~~ knowledge around the country in order to win back some cred for the FASB.

FASB overseers to seek input on new strategic plan [Reuters via Accountancy Age]

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Moody’s Calls Out the USD Haters

Caleb Newquist
June 24, 2009

Russia and China can suck it re: the U.S. Dollar, according to Moody’s, “In the absence of a credible alternative it’s hard to see abrupt changes and that’s not even in the interest of the creditors,” Pierre Cailleteau, managing director of sovereign risk at Moody’s, said in an interview in Tokyo yesterday. The credit rating “remains solid,” he said earlier at a briefing.”
Do you like apples?

Moody’s Says World Has ‘No Credible Alternative’ to U.S. Dollar [Bloomberg]

Scoping

Scoping | 06.24.09

Caleb Newquist
June 24, 2009

Antigua fires finance regulator – Not exactly the most surprising news of the day. [BBC]

Cuomo’s Money Manager Received Funds Linked to Pension Scandal – “EnTrust Capital Inc., a hedge fund firm that’s handled New York Attorney General Andrew Cuomo’s personal and campaign money, received state pension funds to invest from a company he has identified as paying possible illegal kickbacks.” Um, awkward. [Bloomberg]

Missing Governor Was in Argentina – Getting some South American tail no doubt. Deadbeat Dad. [WSJ]

Review Comments

Review Comments | 06.23.09

Caleb Newquist
June 24, 2009

A Lost Decade for Jobs – [Business Week]

All-electric car-sharing debuts in Baltimore – Baltimore? [Miami Herald]

SEC eyes shorter maturity limits for money funds: source – Real reactionary. [Reuters]

White House to Abandon Spy-Satellite Program – This will not reduce the paranoia [WSJ]

Uncategorized

IASB Discusses MD&A and No One Cares

Caleb Newquist
June 24, 2009

Do you spend evenings and weekends reading annual reports as opposed to doing, say, anything? We thought so. So you’re definitely familiar with the cheerleading section in those glossy marketing pieces known as “Management Discussion and Analsyis” or “MD&A”.
Well the IASB has decided that MD&A isn’t worth getting too worked up about as three board members voted “meh”, against issuing an actual proposal that would give management guidance on content. Sayeth:

Because the proposal will not result in a financial reporting standard, issuing it is not an effective use of IASB resources or those of constituents who may feel an obligation to comment, say the three board members, Robert Garnett, Prabhakar Kalavacherla, and James Leisenring.

Common sense appears to be alive and kicking at the IASB. Hoo-RAH.

International Standard Setters Have Their Say on MD&A [CFO.com]

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Grant Thornton LLP Names New CEO, Looks to Coin More Inclusive Title of ‘Global 6 Accounting Organization’

Caleb Newquist
June 23, 2009

Grant Thornton LLP has named Stephen Chipman its new CEO, replacing Edward Nusbaum who is taking the CEO position of Grant Thornton International. The changes take place on January 1, 2010.
In a bit of robotic communications work, the two vomit-worthy statements from the CEO’s are oddly similar.
Nusbaum on June 3rd:

‘I am greatly honored and look forward to the opportunity to lead Grant Thornton International,’ said Nusbaum. ‘I will dedicate myself to continuing Grant Thornton’s tradition of strong leadership in the accounting profession and in speaking out on issues of importance. I want the Grant Thornton brand to mean principled people providing superior service to highly satisfied clients around the world’

Chipman today:

‘I look forward to leading Grant Thornton LLP,’ said Chipman. ‘I will dedicate myself to taking action on a number of fronts, including continuing Grant Thornton’s tradition of providing strong leadership to the accounting profession and speaking out on issues of importance. I will also continue our focus on providing the Grant Thornton Experience for our partners, people and clients, and expanding our global service capabilities and corporate social responsibility agenda.’

Okay, they aren’t identical but, sheesh, put some thought into it guys. These statements read like you just found out your wives were cheating on you…with each other.
Boilerplate CEO statements notwithstanding, the other interesting tidbit that was not subtly inserted in today’s press release was the usage of “Global 6 Accounting Organization” by GT.
Look GT, we see what you’re trying to do. You’re trying to sneak in this fancy little phrase that you think will catch on and it’s not working for us. You’re not in the cool kids club. You’re just not. We feel bad for you but you can’t just show up at the cool party while there’s toilet paper stuck to your shoe and expect to start high-fiving PwC and get laid by some KPMG hottie. Nice try.

Stephen Chipman named CEO of Grant Thornton LLP [Grant Thornton Press Release]

Uncategorized

Legg Mason to Financial Crisis: 100 Years, You.

Caleb Newquist
June 23, 2009

That’s it. It’s official. Worst. Crisis. Ever. If Legg Mason is your gauge on financial crisises, that is.
And since it is such a momentous occasion, guess what this calls for…wait for it…executive bonuses!
Courtesy of footnoted.org, we learn that Chairman and CEO, Mark Fetting’s received approximately a $3M bonus for “leadership of the company during one of the worst financial crises of the last 100 years, which particularly affected financial services companies”
Footnoted goes on to give us some perspective:

Just to make sure, we did a quick check for the word crisis (or crises) at other financial services companies and didn’t come up with anything that even came close. While the word was used in several other proxies, it wasn’t used in a way to justify a bonus and there were no pronouncements about this being the “worst financial crises”.

Okay, so Legg has some melodramatic types writing their filings. But how about some chicanery?:

Equally interesting is that while the board set Fetting’s bonus at 21% of the bonus pool in June 2008, Legg Mason’s loss of $1.9 billion last year meant that there was no bonus pool. But that didn’t stop the bonus because as the comp committee writes in the proxy the net loss was due to just two items and without those two items, the company “would have had net income, and the plan would have produced a total bonus pool large enough to accommodate the annual incentive awards made. Although the terms of the plan do not explicitly provide for the exclusion of those items, the Committee considered the items to be extraordinary expense.”

Seriously, who’s going to let two measly items stop them from paying executives bonuses out of a bonus pool that didn’t really exist? This is financial wartime people, we will not be denied.

Legg Mason calls it: The worst financial crisis [footnoted.org]

Uncategorized

Corporate CEO’s Are Smarter Than You. It’s Got Nothing to Do with Having Insider Information

Caleb Newquist
June 23, 2009

Are you a corporate executive with insider information? Do you have a six-figure mortgage and a significant other with a shopping addiction? Is it possible that you’re not buying the hyperbole about “green shoots”?
Apparently that’s the consensus out there according to the Financial Times:

Executives in charge of the largest US companies sent a signal of their concerns by selling far more shares than they bought this month, according to data based on Securities and Exchange Commission filings.

BFD, you say? To wit:

Share sales by so-called company insiders are outstripping purchases so far this month by more than 22 times. TrimTabs, the investment research company, said insiders of S&P 500 listed companies have unloaded $2.6bn in shares in June, compared with $120m in purchases.

Still not convinced? Maybe this quote from TrimTabs CEO, Charles Biderman will sway you, “The smartest players in the US stock market – the top insiders who run public companies – are not betting their own money on an economic recovery.”
Did you hear that? The smartest players aren’t betting their own money on the recovery. It’s not because they run a shitty company, no, no. It’s because they’re smarter than all of us.

Pessimistic executives cash out of shares [FT.com]

Scoping

Scoping | 06.23.09

Caleb Newquist
June 23, 2009

At Least Seven Killed in Red Line Crash – “One Metro train slammed into the back of another on the Red Line at the height of the evening rush yesterday, killing at least seven people and injuring more than 70 others in the deadliest accident in Metrorail’s 33-year-history.” [Washington Post]

Conspiracy surrounds $134bn ‘bond’ find – If the blogosphere is good for anything, it’s a conspiracy [BBC]

Experts: Apple Disclosure ‘Falls Short’ – [Business Week]

Review Comments

Review Comments | 06.22.09

Caleb Newquist
June 23, 2009

The Public Is Losing Confidence That Stimulus Will Help Economy – Shoots/Shmoots [Clusterstock]

Google is evil – Or simply incorrect [Paul Krugman/NYT]

Beach reading: Chesapeake’s annual meeting transcript – Not the whole thing, obv. We wouldn’t do that to you. [footnoted.org]

Uncategorized

Madoff Feeders Getting Some Unwanted Attention

Caleb Newquist
June 22, 2009

The SEC, feeling confident these days, has filed a complaint against Cohmad Securities Corporation and its Chairman, Chief Operating Officer, and one of the brokers, saying they “actively marketed Madoff investments while ‘knowingly or recklessly disregarding facts indicating that Madoff was operating a fraud.'”
Call us Captain Obv but that sounds like they were either dumb or in on the scam. Either way, they can’t be too psyched about it.
An additional complaint has been filed by the SEC against Stanley Chais, an investment adviser who put all of the assets he oversaw into casa de Madoff.
Irving Picard, who might have the most thankless job in America, also sued both Cohmad and Chais, because, you know, a few people want their money back. The trustee’s complaint against Cohmad spells it out:

The trustee’s lawsuit asserted that fees paid to Cohmad by Mr. Madoff were based on records showing the actual cash status of customer accounts — the amounts invested and withdrawn — without including the fictional profits shown in the statements provided to customers. When a customer’s withdrawals exceeded the cash invested, Cohmad’s employees no longer earned fees from that account — even though the customer’s statements still showed a substantial balance, according to the lawsuit.

This arrangement indicated that Cohmad and its representatives knew about the Ponzi scheme and knew that the profits investors were allegedly earning were bogus, according to the trustee’s complaint.

Good luck explaining that.

Brokerage Firm and 4 Others Sued in Madoff Case [New York Times]

Uncategorized

SHOCKER: Doesn’t Appear that Stanford Auditors were Doing Any Auditing

Caleb Newquist
June 22, 2009

Last week’s indictment of Allen Stanford has brought up the always popular question when fraud, occurs: “Who are the auditors that were asleep at the wheel of this disaster?”
Well, in this case, the auditors were a local UK two-person shop, CAS Hewlett, which must be Queen’s English for Friehling & Horowitz.
It doesn’t appear that CAS Hewlett has a website, but they’ve been doing the Stanford “audits” for at least 10 years, so obv they’re legit. PwC and KPMG both have offices on Antigua but Stanford preferred to stay with its “trusted firm”. Totally understandable.
And the best part? The founder of the firm, Charlesworth “Shelly” Hewlett died in January, approximately a month before the story broke on the Ponz de Stanford.
This all adds up to who-the-fuck-knows if audits were even occurring and for us to speculate if Shelly needed to get got because Stan knew that the poo and fan were coming together. Just sayin’.

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