Monthly Archives: August 2016

Order matters

Some corporations used to play fast and loose with financial reports, or at least with that portion of the financial reports that were prepared according to GAAP and which ones weren’t.  GAAP – generally accepted accounting principles.

“Firms Say Goodbye to Prettied-Up Financial Reports,” The Wall Street Journal, August 30, 2016 B5.  Firms used to front-end load some of their financial reports with “custom” treatments of the results, and put the legally required GAAP treatment “later.”  Why?  To make things look better, some say, or to reflect the unusual nature of that particular business.  Your pick.  Now, the GAAP treatment must come first, and the massaged (customized) treatment, later.  I guess that’s better than prohibiting non-GAAP treatment altogether.

Management of information comes in many forms.  Order of presentation is but one of them.  Governing the management of information involves setting the rules “governing” that management.

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Filed under Board, Compliance, Governance, Inform market, Inform shareholders, Oversight

A corporate fine with individual accountability

I rail from time to time on the breaches of law or policy that result in corporate fines but no individual accountability.  So I was relatively happy to see “Goldman Pays Up Over Leak,” The Wall Street Journal, August 4, 2016 C1.

A staffer at the Federal Reserve in New York leaked confidential government information to a former colleague, who then worked at Goldman Sachs. Another Goldman Sachs executive knew about the leak of the information and failed to report it to his superior.


  • The staffer who leaked the information got fired and fined $2,000.
  • His former colleague pled guilty to theft of government property (and not receiving stolen goods), was barred from the banking business for life, and fined $5,000.
  • The Goldman Sachs executive who knew but didn’t tell – he was fired, and faces a proposed fine of $337,500 and a lifetime bar from the banking industry (his lawyer says he’s fighting the allegations).
  • Goldman Sachs paid $50 million to New York State and $36+ million to the Federal Reserve.

Quoting from The Journal, “[t]he Fed said it is ‘illegal to use or disclose confidential supervisory information without prior approval of the appropriate banking regulator.'”  The article did not provide a regulatory citation for this requirement.

So, the relatively good news is, while the shareholders of Goldman paid the majority of the penalty, at least the actual perpetrators paid something.  What percentage of $86 million is $2,000?

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Filed under Business Case, Compliance, Duty, Employees, Governance, Information, Ownership, Protect assets, Risk, Value

PG&E, cont’d

This one isn’t in the print edition.  But it’s an interesting development.

“Prosecutors Sharply Reduce Potential PG&E Penalties From Pipeline Explosion,” The Wall Street Journal, August 3, 2016.

PG&E is being sued for the explosion of a gas pipeline in San Bruno in 21010 that killed 8.  I follow this case because of PG&E’s inability to locate vital records related to more than half of the 212 miles of pipeline.  Records of  inspections required by regulation and such.

In day four of jury deliberations in the criminal trial against PG&E, the government reduced the amount of fines it was seeking from $562 million to $6 million.  The larger amount was the calculation of twice the amount of money PG&E saved by not doing what the regulations required.

Why?  What does this say about how important compliance it?  Will any corporate executives go to jail? Or be sued by the shareholders?


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Filed under Business Case, Compliance, Compliance, Controls, Culture, Directors, Duty, Duty of Care, Employees, Governance, Internal controls, Management, Risk

Heads roll

Notwithstanding the Yates Memorandum, not a lot of senior executives have taken the fall for company problems.  However comma.

“Email Hack Leads to a DNC Shake-Up,” The Wall Street Journal, August 3, 2016 A4. The CEO and two other senior executives are leaving following the email hack at the DNC (in addition to Chairwoman Debbie Wasserman Schultz).

Not clear whether this was because the the breach per se, or the content of what was disclosed.  It is good that people at the top take responsibility.

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Filed under Business Case, Controls, Directors, Duty, Duty of Care, Governance, Internal controls, IT, Risk, Security