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:

Madoff Investors vs Rajaratnam Investors

A NYTimes op-ed raises an interesting question: When we sue Madoff investors who were "net winners" to recover their ill-gotten gains, why don't Rajaratnam's Galleon investors face consequences of a similar nature--why are they allowed to keep their ill-gotten gains?  From the op-ed:

Lance Armstrong Investigation: New Charges May Be in the Works

(photo taken from ESPN website)

The incident that I blogged about yesterday regarding a hostile confrontation between Lance Armstrong and his former friend and chief lieutenant, Tyler Hamilton, may be more serious than Lance had imagined. Tyler's attorneys have reported the incident to federal authorities since it potentially involves witness tampering. A few more details are coming out today. For example...

Lance Armstrong Investigation: Tyler and Lance Have Confrontation

(photo courtesy of NBC website)

Abe Streep of Outside Magazine is reporting that Tyler Hamilton took a group of cyclists on a bike tour for the magazine and then took them to dinner at the Cache Cache Restaurant in Aspen, Colorado. The reports say that Hamilton mistakenly thought Armstrong was out of town. To his surprise, when Tyler was leaving the restroom, an arm blocked the hallway and...

Lance Armstrong Investigation: 60 Minutes Responds

Yesterday's news was that Lance Armstrong's legal team was asking for an apology from 60 Minutes. I mentioned that I wasn't going to hold my breath waiting for 60 Minutes to tell Lance they are sorry. News reports are now publishing the response from the program. Here is what is being reported that they said:

Lance Armstrong Investigation: Odds and Ends

In today's news, various sources are reporting that Lance's lawyers are demanding an on-air apology from 60 Minutes. I personally am not holding my breath...

Well, aside from that news, I have had questions about the Lance Armstrong investigation asked to me from some friends and thought I'd document my thoughts to these questions. Some of you may have had similar questions or may hear similar questions as the public starts hearing more about the investigation. For example, a friend in my neighborhood asked me "How could he be guilty when he was tested so many times?" My response...

Political Perks: Evidence of Insider Trading in Washington

When it comes to insider trading cases, probably none have been as big as the recent conviction of the billionaire Raj Rajaratnam, former hedge fund manager and founder of Galleon Group. (See our prior posts on Rajaratnam here.)

Rajaratnam had a huge web of contacts that fed him with insider information which he then traded on to make billions and to obtain abnormal returns for investors in his hedge funds. His case has been hailed as a huge victory for the US Justice Department in an effort to crack down on what is believed by some to be a widespread problem in our capital markets.

There is now evidence suggesting that the Justice Department may not need to look so far from Capital Hill to find rampant insider trading. A new study...

Lance Armstrong Investigation: More Evidence Coming Out

Several news sources are reporting today that the head of the Swiss lab that was involved in testing Lance Armstrong's urine during the 2001 Tour of Switzerland, Martial Saugy, has confirmed that he did meet with both Lance and his manager, Johan Bruyneel.

This is consistent with the story that Tyler Hamilton and Floyd Landis have told regarding Lance having a positive test for EPO in the 2001 Tour of Switzerland. However, details of the meeting as told by Saugy, if correct, show that Hamilton's understanding was mistaken in some respects. Here is Saugy's story:

Lance Armstrong Investigation: Latest News

It sounds like Jeffrey Novizky's investigation of Lance Armstrong will probably be in the news quite a bit over the summer as the Grand Jury is likely to indict Lance. This news comes from Lance's home town newspaper, The Statesman, which quotes several "legal experts" on the case. Here are some quotes from the article: