Saturday, January 30, 2010
So what does this mean? I suppose, for example, if the company believes it is too close to the rising oceans and could be under water sometime in the next millennium then it needs to disclose that risk! Also, if a company believes legislation on global warming could negatively impact future earnings then the company needs to disclose that risk.
I personally think that the effects of global warming are so hard to predict that companies could comply with this requirement in one sentence: "The effects of global warming or legislation related to global warming on the Company's assets or operations are not estimable in any reliable way." Seems like some wasted ink to me. Maybe the SEC wants companies to say something like: "The impact on the environment from the extra paper necessary to disclose the possible effects of global warming will not lead to any serious litigation since the company is required by the SEC to go through this silly exercise!"
We can only assume that the SEC will be spending time and money reviewing these disclosures to determine if companies are sufficiently complying. Never mind that they had their hands full and failed to regulate some huge Ponzi schemes such as those operated by Bernie Madoff and R. Allen Stanford before investors lost tens of billions in these schemes! Is this really a priority?!
It seems that investors have serious risks of fraud in this world. Scammers such as Madoff, Pang, Stanford, and companies such as Enron, Worldcom and Satyam need to be regulated and shut down. The SEC needs adequate resources to do these jobs and it has appeared to lack the necessary funding for decades. However, if this is their focus in the future then I question whether voters will sympathize with their calls for additional funding!
Friday, January 15, 2010
The editorial goes on to recommend that a small percentage of the funds should be set aside to prevent fraud and abuse. Unless funds are given to support the accounting for and the prevention of fraud in these funds, a large chunk will go to undeserving fraud perpetrators. It's already happening. For example,
The Obama administration—and state and local governments—should brace themselves for fraud on an Olympic scale as hundreds of billions of taxpayer dollars continue to pour into job creation efforts.
Where there are government handouts, fraud, waste and abuse are rarely far behind. The sheer scale of the first and expected second stimulus packages combined with the multitiered distribution channel—from Washington to the states to community agencies to contractors and finally to workers—are simply irresistible catnip to con men and thieves.
A tenfold increase in funding for an obscure federal program that installs insulation in homes has state attorneys general quietly admitting there is little hope of keeping track of the money.Earlier this week, U.S. Attorney General, Eric Holder, announced the creation of a task force to fight fraud. The task force will include numerous government agencies from the SEC to the FBI, HUD and everything in between. Holder recognizes the potential for fraud in the stimulus funds as he announced that one of the four purposes of this task force is to focus on:
Recovery Act and rescue fraud —including the theft of federal stimulus funds and the illegal use of taxpayer dollars intended to shore up our financial institutionsHowever, a task force may be too little too late if they don't put some controls in place quickly! The goal is not to create jobs (see this post) but to use the funds for the purpose they were intended. Unfortunately, as Aaron pointed out yesterday, when money is used to do good, there are scammers who are trying to take it for selfish pursuits.
Thursday, January 14, 2010
The FBI today reminds Internet users who receive appeals to donate money in the aftermath of Tuesday’s earthquake in Haiti to apply a critical eye and do their due diligence before responding to those requests. Past tragedies and natural disasters have prompted individuals with criminal intent to solicit contributions purportedly for a charitable organization and/or a good cause.
Therefore, before making a donation of any kind, consumers should adhere to certain guidelines, to include the following:
Charity Navigator and Foundation Center are two recognized resources for vetting charities. Also, wsj.com has put together a list of reputable charities here.
- Do not respond to any unsolicited (spam) incoming e-mails, including clicking links contained within those messages.
- Be skeptical of individuals representing themselves as surviving victims or officials asking for donations via e-mail or social networking sites.
- Verify the legitimacy of nonprofit organizations by utilizing various Internet-based resources that may assist in confirming the group’s existence and its nonprofit status rather than following a purported link to the site.
- Be cautious of e-mails that claim to show pictures of the disaster areas in attached files because the files may contain viruses. Only open attachments from known senders.
- Make contributions directly to known organizations rather than relying on others to make the donation on your behalf to ensure contributions are received and used for intended purposes.
- Do not give your personal or financial information to anyone who solicits contributions: Providing such information may compromise your identity and make you vulnerable to identity theft.
Wednesday, January 13, 2010
After pleading guilty in Cardiff Crown Court to forging an uncle’s checks worth $65,000, Hayley Price, 42, was fined $8, given a suspended sentence and ordered to do community service. The judge reasoned that Price was broke, having already spent the money.Can you guess why white collar crime has a high recidivism rate (i.e. a lot of repeat offenders)?