Word: enronization
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Dates: during 2000-2009
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Joseph Grundfest, a Stanford Law School professor, attributes a recent drop in shareholder lawsuits to aggressive government enforcement following the Enron fraud. But others say Grundfest discounts more likely causes: a relatively steady stock market and the criminal investigation of the law firm that files most shareholder suits. And even if he's right, a strategy of criminal prosecution is still a bad idea...
...event, KPMG's reluctance to let regulators inspect backup documents pushed the feds' buttons. By 2004, Justice had launched a criminal investigation. A federal indictment helped kill Enron's auditor, Arthur Andersen, in 2002, so KPMG tried to avoid indictment by doing pretty much whatever the government wanted. That included cutting off the payment of legal fees for indicted employees. The groveling worked for KPMG, which dodged indictment, but not for the 16 indicted employees, who couldn't afford their lawyers. A New York federal judge ruled that they could sue KPMG for their legal bills (KPMG has appealed...
...what about Sarbanes-Oxley, the 2002 law enacted to prevent Enron-style scandals? Among other burdens, it requires financial statements so squeaky clean that a company's chief executive and financial officers can vouch for their accuracy. Corporate executives estimate that the law has cost U.S. companies tens of billions of dollars in extra auditing fees and other expenses...
...exists.) The fsa's remit: working with firms to pinpoint potential risks long before things go wrong, rather than simply prescribing rules. While the U.K. watchdog listens, suggest industry representatives, U.S. regulators prefer to bark. The U.S. Sarbanes-Oxley Act, a 2002 response to the accounting scandals that toppled Enron and WorldCom, was intended to stiffen standards of corporate governance in public firms. In reality, the cumbersome auditing requirements - not to mention the cost and time involved in complying - have put many firms off listing on U.S. stock exchanges...
...that performance. To tap overseas investors, China's best companies?from mobile-phone operators to insurance firms?have made Hong Kong's stock market their No. 1 choice for going public. Why? The imposition of onerous reporting requirements on companies listing in the U.S. in the wake of the Enron scandal has knocked some of the shine off New York, while Chinese bourses in Shanghai and Shenzhen are often considered to be too immature and restricted (foreigners are allowed to trade freely only in certain shares). Besides, Hong Kong has no shortage of local and international investors who love...