Category Archives: Inform market

Lawsuits as a management technique

“Shareholders Sue More Frequently,” The Wall Street Journal, August 22, 2017 B1.  Study show shareholders (or class action lawyers) are litigating more when their company is sued, alleging false and misleading statements by management.  One-hundred thirty-one suits in fist six months of 2017.

So, when communicating to the market or shareholders, make sure everything will stand the test of time.  Is it accurate?  Is it complete?

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Filed under Accuracy, Board, Communications, Controls, Corporation, Directors, Duty, Duty of Care, Governance, Inform market, Inform shareholders, Information, Investor relations, Risk assessment, Third parties, Value

Can shareholders do that?

Can one of the shareholders both sue your former CEO for fraud and contact all the other shareholders?  Apparently.

That’s what happening at Uber.  “Kalanick Critic Stirs the Pot,” The Wall Street Journal, August 15, 2017 B1.  Benchmark Capital (which also sits on the Board) sued the former CEO at Uber for fraud, saying he had failed to disclose “secret bad business practices,” which may revolve around the CEO’s increase in the number of directors, or allegations about sexual harassment and sexism.  While Uber searches for a new CEO, it is managed by a 16-person committee.  How’s that working for you?

Apparently, derivative actions aren’t a shareholder’s sole remedy.  And a board member can sue as an individual shareholder.

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Filed under Board, Compliance, Controls, Corporation, Culture, Directors, Duty, Governance, Inform market, Inform shareholders, Internal controls, Oversight, Shareholders

VW may face fraud charges

VW is being investigated by the EU’s antifraud office since November 2015, in connection with loans based, in part, on VW’s green environmental reputation.  The emissions cheating scandal has cost $25 billion.  And counting.  May recommend that Germany charges two employees with fraud.  German authorities are in on the hunt, too.

“Volkswagen Faced With New Legal Woes,” The Wall Street Journal, August 1, 2017 B3.

Who knew what when, and who failed to disclose what they knew?  When it rains, it pours.

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Filed under Board, Compliance, Compliance, Corporation, Duty, Employees, Governance, Inform market, Inform shareholders, Managers, To report

Altered metrics

If someone asks you to “alter” or “fudge” a financial metric reported to the market, take pause.  Or hit the big red button.

“Witness: Magnate Knew of Altered Metric,” The Wall Street Journal, June 28, 2017 B9. The chairman of a large company allegedly knew that one of the financial metrics the company reported to the market for the previous quarter was improperly inflated.  Or fudged, as they say in the trade.  By $12 million.

The former chief accounting officer took a plea to fraud (and admitted to lying on other matters) and is cooperating with the government; the former CFO is charged with criminal fraud and is at trial.  The company is “cooperating.”  The chairman hasn’t been charged.  Yet.

Why isn’t the company charged?  At least one of its agents appears to have committed a fraud.  Why isn’t the chairman charged, if he knew?  Is this consistent with the Yates memo?  Is there a civil (derivative) suit against the chairman?

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Filed under Accuracy, Board, Collect, Communicate, Compliance, Compliance, Compliance, Controls, Corporation, Directors, Duty, Duty of Care, Employees, Governance, Inform market, Internal controls, Management, Oversight, Oversight

Digging out

I was otherwise engaged last week and missed posting.  Here are some catch-ups.

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Filed under Accuracy, Board, Communications, Compliance, Compliance, Content, Controls, Corporation, Directors, Discovery, Duty, Employees, Governance, Government, Inform market, Inform shareholders, Internal controls, Investor relations, Oversight, Privacy, Protect assets, Protect information assets

TMI

Can you get too much information?  Yes.

“KPMG Fires Partners Over Leak,” The Wall Street Journal, April 12, 2017 B1. KPMG fired 5 partners, including the head of the audit practice and the national managing partner for audit quality and professional practice(and the vice chairman of audit, after information from the PCAOB (a regulatory oversight agency) was leaked by a now-former PCAOB employee. (BTW, they also audited Wells Fargo when the account cramming was going on, among others).

Unusual to learn of the firing of partners, and the details.  One might surmise KPMG indeed has zero tolerance, at least when there’s no apparent defense.

Another in the long line of crises around information mismanagement.

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Filed under Board, Compliance, Compliance, Controls, Corporation, Culture, Duty, Employees, Governance, Government, Inform market, Inform shareholders, Internal controls, Investor relations, Oversight, Oversight, Supervision

What you don’t say

If a corporation fails to raise “‘known trends or uncertainties'” in securities filings, has it committed fraud against third parties?

Maybe.

“High Court To Weigh Corporate Omissions,” The Wall Street Journal, March 28, 2017 A2.  Supreme Court to hear a case involving suit by investors against company for omissions in public filings, otherwise the purview of the SEC.

So, does this mean that unspoken information is “information” subject to government regulation or third-party litigation?

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Filed under Accuracy, Board, Communications, Corporation, Definition, Duty, Governance, Inform market, Inform shareholders, Information, Oversight