Madoff and the SEC: Serious Conflicts Existed

The NY Times recently discussed the results of a report on the SEC showing that a lawyer with heavy involvement in the Madoff case had serious conflicts of interest. Here are a few key quotes from the article:

Lance Armstrong Investigation: Money Trails and Ferraris

I apologize for being so slow to comment on this news but last week I was taken out of commission by a long-boarder who ran into me while riding my bike. I ended up with a broken arm, broken rib and broken bike frame, not to mention a lot of road rash and a concussion. I was unconscious for about ten minutes, or so they say. But, enough of the excuses. What do I make of this news about Lance and Michele Ferrari? Here is my take:

Deloitte and Taylor Bean: Real Money is on the Line

Another of the Big 4 is being sued regarding their audit of a firm that was allegedly committing serious fraud during the mortgage meltdown, Taylor Bean. Here is an excerpt from an article on Bloomberg which describes the lawsuit involving Deloitte:

The Cost of Loss [Guest Post]

Fraud affects everyone. According to a recent survey, US businesses lose an estimated $400 billion due to fraud each year. The Association of Certified Fraud Examiners found that one in four employees commits fraud at some point in their careers, and a quarter of those employees worked for their employer for more than ten years! Every industry feels the loss associated with fraud, and the public often foots the bill. Despite the best efforts of auditors and accountants to detect fraud, the losses remain steady from year to year. As a question of forensic psychology, what motivates loyal and otherwise trustworthy people to take dishonest advantage of employers? Regardless of individual circumstances, we find surprisingly similar motives and means.

Rouge Traders and Double Standards

You may have seen the recent news of a rouge trader at UBS whose trading activity led to a $2 billion loss for the company.  In a recent blog post, the WSJ highlights what may be a double standard in unauthorized trades:

Ernst & Young and Lehman Case is Still Cooking

Fox News published a short article about litigation involving Lehman and its executives and mentioned that the lawsuit against EY is still progressing. The article says that testimony may be recorded in the near future about the motivation for Lehman's extensive use of Repo 105 transactions. Here are a few quotes:

Madoff Claims He's Teaching at Harvard

It sounds like Bernie Madoff is telling stories again. According to this short article on Fox, Bernie said:

The Latest on Bernie Madoff's Victims

An excellent NYT editorial discusses the latest in the Bernie Madoff saga.  For those of you who may not be following the story very closely, last Thursday the judge overseeing the civil suits brought against alleged beneficiaries and enablers of the Madoff fraud threw out a suit against HSBC, dealing a pretty substantial blow to the efforts to recover funds for Madoff's victims.  The entire editorial is worth reading, but here are a few tidbits that stood out to me:

An Update on Lehman and EY

According to an article in the Wall Street Journal:

A lawsuit contending that Lehman Brothers Holdings Inc.'s former officials, underwriters and auditors are responsible for investor losses should go forward for the most part, a federal judge ruled Wednesday.

According to the article, the judge ruled that:

More on the Cheating Scandals in Public Schools

Imagine if the response to Enron and WorldCom was to say that business leaders are set up to commit fraud because the market is too interested in accounting information so we should have businesses report less economic data about their performance. According to an article in The New Republic, that is essentially the reaction by some in education to the recently reported cheating scandals in Atlanta and elsewhere. Here are a few quotes:

International Auditing

Finding fraud in any company can be very hard.  The most egregious financial statement frauds are often the result of a coordinated effort by multiple individuals, who design the fraud in a way that will allow it to go undetected by standard audit procedures.  Even nonstandard audit procedures can fail to detect a well designed, strategic fraud.  Combine that with international audit clients operating in emerging economies, and you have a recipe for disaster.  This is creating problems for auditors in China, as highlighted by the WSJ:

A Fraudster Cyclist with a Defective Moral Compass

If you know Michael Rasmussen's story, you know that he was leading the Tour de France in 2007 when he got kicked out of the race and fired by his team. Why? Because he was caught breaking the rules with respect to doping. So what is he doing now? He's suing his former team because they fired him! I'm totally amazed by this! Here is what we know...

More Teaching Scandals in the News

Last October, I wrote about a teaching scandal in Georgia schools where teachers were apparently erasing and correcting students answers on standardized tests so as to obtain funding and accolades. Yesterday, Freakonomics discussed this and linked a news report showing that Atlanta has had massive teacher fraud going on for several years. In addition...

Lehman Update

A few days ago my dad and I were wondering when we were going to hear additional news about the status of the Lehman Bros Repo 105 case.  It turns out we missed a Bloomberg article about the issue a few weeks ago.  According to the article the SEC is having a hard time finding sufficient evidence to sue Lehman for their use of Repo 105 transactions.  Here is an excerpt from the article: