Securities: November 2006 Archives

Dell Says SEC Has Begun Formal Probe

The Securites and Exchange Commission has begun a formal investigation into Dell Incorporated. Dell has been under an informal inquiry since August. A Dell spokeswoman said that the company did not know what the SEC was investigating. "Dell continues to cooperate with the SEC, and is committed to resolving all issues in connection with the investigation and regaining compliance with all SEC filing requirements as soon as possible," said the company.

Dell says SEC has started formal probe

Rob Enderle, an analyst for the Enderle Group, said that it is too early and that not information has yet been released to know what effects the probe could have on Dell. Enderle said of the probe: "This is pretty serious. It looks like they've got a significant discrepancy that they can't reconcile. My guess is it's something that they misclassified. The thing is, we don't know enough other than that there are problems."

Posted by Patricia Bowling at 07:53 PM | Permalink

Utah Prosecutors Target White Collar Criminals For Securities Fraud

A group of government prosecutors are looking to crack down on Utah’s con artists, swindlers and white-collar criminals. According to Utah’s U.S. Attorney, Brett Tolman, government officials are targeting less sophisticated to multimillion dollar schemes. Prosecutors, in cooperation with local police officers, are focusing on investment scams, tax evasion, public corruption, Social Security fraud, mortgage fraud and securities fraud.

Posted by Ryan Jardine at 09:45 PM | Permalink

Dunn Pleads Not Guilty

Patricia Dunn, the former Hewlett-Packard Co. Chairwoman, pleaded not guilty to four felony identity theft and fraud charges for instigating the company's spying probe into boardroom leaks. Dunn is one of five people charged with pretexting in the company's attempt to find board members who discussed company business with reporters. Dun resigned from HP's board after the scandal became national news in September.

Former HP chairwoman pleads not guilty

Kevin Hunsaker, HP's former ethics chief who is believed to have encouraged the probe, pleaded guilty last week. Three private investigators also entered not guilty pleas and were released. Each of the defendants faces four counts: use of false or fraudulent pretenses to obtain confidential information from a public utility; unauthorized access to computer data; identity theft and conspiracy to commit each of these crimes.

Posted by Patricia Bowling at 12:15 PM | Permalink

KB Home CEO Out

Homebuilder KB Home has announced chairman and CEO Bruce Karatz is retiring after an internal investigation revealed erros in the company's accounting of stock option grants. Incorrect measurement dates for financial reporting purposes for yearly stock option grants from 1998 to 2005 were discovered and, as a consequence of the errors, the company expects to lose up to $50 million.

The company still is deciding whether to restate earlier financial statements and says that they are cooperating with a Securities and Exchange Commission inquiry. The internal investigation board concluded that Karatz was involved in "selecting grant dates under the company's stock option plans" and that other executives "had no role in establishing incorrect grant dates." Karatz was one of the highest paid executives in the country in 2005, making most of his money from exercising options.

Posted by Patricia Bowling at 06:57 PM | Permalink

SEC and San Diego Reach Settlement

The Securities and Exchange Commission (SEC) has reached an agreement with the city of San Diego in an effort to help resolve extensive and serious securities fraud charges. The SEC claimed the city engaged in serious securities fraud when they withheld information regarding pension deficits from investors. In the settlement, the city agreed to stop future securities violations and hire an official to provide oversight of financial dealings. According to an official with the SEC, “San Diego’s misconduct jeopardized the interests of its citizens, its current and future retirees, and those who placed their trust in the city’s bonds as an investment.”

San Diego city officials did not tell investors of the growing pension obligations and that they had not lived up to requirements which called for sewer-system costs to be equally distributed between residents and businesses.

Posted by Ryan Jardine at 11:32 PM | Permalink

Another Enron Executive Sentenced

One of Enron’s fallen chief executives was sentenced today to five and a half years in prison for securities fraud. The former chief accounting officer, Richard Causey had pled guilty after being charged with over 30 counts of conspiracy, wire and securities fraud. Government officials said, “Causey admitted to conspiring with members of Enron’s senior management to make false and misleading statements in Enron’s filings with the [SEC].”

Posted by Ryan Jardine at 10:48 PM | Permalink

Man Sentenced for Over 14 Years in Prison for Securities Fraud

A man who defrauded investors of almost $4 million USD between the years 1999 and 2004 was sentenced to over 14 years in prison. Kevin Kelly was held without bail since the trial began because the judge held he committed perjury and had a tendency to con others for his own gain. Before his conviction, he was an investor at American International Group’s Royal Alliance Associates in Stamford, Connecticut.

Posted by Ryan Jardine at 06:51 AM | Permalink

Small Business Owner Defrauds Over 50 Investors

A small business owner in Alabama is being charged with over 100 counts of securities fraud and 11 counts of theft of property. Sybil Watkins defrauded nearly $1 million US dollars from over 50 private creditors. His daughter, Christy Dawsey, has also been charged with nearly 20 counts of securities fraud. Her attorney claims that she has been charged “because her signature was used to witness some of the loan documents.”

Posted by Ryan Jardine at 02:18 AM | Permalink

UnitedHealth Options Costs Exceed $286 Million

UnitedHealth Group Inc. said that charges related to mispriced stock options look to be "significantly greater" than prior estimates of $268 million. Chief Executive Stephen Hemsley has agreed to cut his past stock option compensation by about $190 million after a report last month on the company's option award practices. "My decision is in keeping with my personal goal of avoiding even the appearance of any unintended benefit from any past option grants to me," said Hemsley in a press release.

UnitedHealth's option costs far exceed $286M

Because of the confusion over the options matter, UnitedHealth said its financial statements from 1994-2005 and the first nine months of 2006 could not be relied upon. UnitedHealth is "working as quickly as possible to return to current filing status." UnitedHealth has not yet reached an agreement on terms for departing CEO William McGuire.

Posted by Patricia Bowling at 04:29 PM | Permalink

Martha Stewart to Pay $5 Million for Insider Trading Case

Martha Stewart Living Omnimedia said Wednesday that it will pay $30 million to settle a class action lawsuit related to the ImClone insider trading case. Martha Stewart will pay $5 million of the settlement, the company will pay $15 million, and the remaining $10 million will be paid by insurers.

Martha Stewart in $5 million civil settlement

In 2001, Stewart was accused of selling 4,000 shares of the biotech ImClone based on an insider trading tip that ImClone's experimental cancer drug Erbitux was struggling. Sam Waksal, the founder of ImClone, is currently serving a seven-year prison sentence. Stewart spent less than six months in jail for making a false statement, obstruction of justice, and conspiracy.

Posted by Patricia Bowling at 04:15 PM | Permalink

SEC Chief Suggests Blogs for Disclosures

The Securities and Exchange chairman Christopher Cox said he was interested in the idea of allowing companies to use weblogs as a means to disseminate important corporate information. Cox has invited the chief executive of Sun Microsystems, Jonathan Schwartz, to talk to the SEC about allowing companies to disclose major financial information through blogs.

SEC Chief Suggests Blogs for Disclosures

Cox showed interest in Schwartz's recent request for blogs to be used as a way to expand investors' access to information. Cox's comment on Schwartz's blog caught the attention of the online world. "The (SEC) encourages the use of Web sites as a source of information to the market and investors, and we welcome your offer to further discuss with us your views in this area," said Cox, in Schwartz's blog.

Posted by Patricia Bowling at 12:14 PM | Permalink

Private Equity Probe for Merrill

The Justice Department is requesting information from the private equity arm of Merrill Lynch as a part of its inquiry into anti-competitive behavior in the private equity sector. The department is conducting an informal inquiry into whether there has been anti-competitive conduct among some private equity firms and has already sent letters to some of the largest private equity firms. The Justice Department is especially interested in firms' practice of joining together on some bids.

Report: Merrill hit by private equity probe

Merrill Lynch's private equity arm teamed up with buyout firms Carlyle Group and Clayton, Dubilier & Rice in September 2005 to buy rental car company Hertz. Carlyle, CD&R, Kohlberg Kravis Roberts & Co., and Silver Lake Partners all have received letters over the past few weeks related to the probe.

Posted by Patricia Bowling at 08:22 PM | Permalink

Ex-McKesson Executives Found Innocent on 1 Fraud Count

Charles W. McCall and Jay Lapine, two former McKesson Corp. executives, were found innocent of one count of federal securities fraud; however, a mistrial was declared on six other counts in a $9 billion accounting scandal. McKesson is the largest pharmaceutical distribution company in the U.S. McCall's attorney, Theodore Wells, said of the verdict: "Mr. McCall and I are very happy that he was found not guilty on the conspiracy count. It is very difficult to represent a CEO in this post-Enron/WorldCom environment."

2 Ex-McKesson Executives Found Innocent On 1 Fraud Count

The panel remains deadlocked on the remaining charges against McCall and Lapine. The accounting scandal was in part to make HBO, a medical software manufacturer, a more attractive candidate for a merger with McKesson. News of the scandal first came out in April 1999.

Posted by Patricia Bowling at 12:28 AM | Permalink

More Options Probes Coming

Christopher Cox, the Securities and Exchange Commission Chairman, says that he expects more investigations into the backdating of stock options to emerge in the near future as the SEC probes possible manipulation of option awards to executives. "I expect that we'll be seeing more, as a result of that process, in days ahead," said Cox, at an academic conference on stock options dating.

SEC chair: more options probes coming

More than 140 companies are conducting internal reviews or are currently under investigation into how they dated stock options awarded to executives.

Posted by Patricia Bowling at 11:12 AM | Permalink

CA's Ex-CEO: 12 Years for Fraud

Sanjay Kumar, the former chief executive of CA, pleaded guilty to charges including conspiracy, securities fraud, and obstruction of justice and was sentenced to 12 years in prison for his part in a $2.2 billion accounting fraud scheme at the computer software company. Kumar also was fined $8 million.

CA's ex-CEO gets 12 years for fraud

Assistant U.S. Attorney Eric Komitee said that Kumar's actions were "the most brazen and comprehensive obstruction in the modern era of corporate crime." Kumar's attorneys had asked for leniency, mentioning Kumar's good works and saying that "This is not a case where the fraud affected the fundamental health of the company. CA is still a thriving company."

Posted by Patricia Bowling at 10:58 AM | Permalink

Identity Theft Targets The Vulnerable

Identity theft is becoming one of the most popular tools for today’s con artists. An article on marketplace.publicradio.org explains the tactics of many these criminals. The National Association of Securities Dealers funded a study which unveiled who is getting victimized by identity theft. The article estimates that those who have been the victim of a negative life event are most likely to be targeted.

Posted by Ryan Jardine at 10:09 PM | Permalink

November 30, 2006

Dell Says SEC Has Begun Formal Probe

November 29, 2006

Utah Prosecutors Target White Collar Criminals For Securities Fraud

November 28, 2006

Dunn Pleads Not Guilty

November 27, 2006

KB Home CEO Out

November 21, 2006

SEC and San Diego Reach Settlement

Another Enron Executive Sentenced

November 10, 2006

Man Sentenced for Over 14 Years in Prison for Securities Fraud

November 09, 2006

Small Business Owner Defrauds Over 50 Investors

November 08, 2006

UnitedHealth Options Costs Exceed $286 Million

Martha Stewart to Pay $5 Million for Insider Trading Case

November 07, 2006

SEC Chief Suggests Blogs for Disclosures

November 06, 2006

Private Equity Probe for Merrill

Ex-McKesson Executives Found Innocent on 1 Fraud Count

November 02, 2006

More Options Probes Coming

CA's Ex-CEO: 12 Years for Fraud

November 01, 2006

Identity Theft Targets The Vulnerable