Category Archives: Communicate

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?


Leave a comment

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

Texas Administrators

Soon to be signed into law is a bill holding school administrators, superintendents, and principals criminally liable for failing to report teachers who commit “inappropriate acts” with students.  The offending teachers are already potentially liable.

“Texas Measure Targets Improper Teachers, The Wall Street Journal, May 22, 2017 A3.

Surprising it wasn’t the law already.  Mr. Bumble was right:  the law is a ass.

Leave a comment

Filed under Communicate, Communications, Controls, Duty, Employees, Governance, Government, Internal controls, Management, Managers, Oversight, Supervision

Wealth Mismanagement

Yes, the Oscars ceremony had its information mix-up, when Warren Beatty was given the wrong envelope.  But who was (and “was” is probably the operative word) in charge of calculating and communicating the cost basis for stock?

“Morgan Stanley Gave Clients Wrong Data,” The Wall Street Journal, February 28, 2017 B9.  Firm miscalculated the cost basis, and therefore the gain, on sales of stocks by the firm’s wealth-management clients for 5 years.  Anticipated cost: $70 million.

How do you ensure that the right information is getting to the right place (person) at the right time?  What controls do you have in place?  Are those controls people, process, or technology?  While it took PWC a few minutes to correct the error at the Oscars, it took Morgan Stanley five years.  Who had the better process?

Leave a comment

Filed under Accuracy, Collect, Communicate, Controls, Corporation, Duty, Duty of Care, Employees, Governance, Internal controls, Management, Managers, Oversight, Policy, Protect, Protect assets, Use

You manage what you measure

If you are serious about imposing a requirement, measure compliance with that requirement and publish the data.

“OPEC Data Show Compliance With Production Cuts,” The Wall Street Journal, February 14, 2017 B9. OPEC confirms 90% of its members are complying with agreement to curtail output.

Leave a comment

Filed under Collect, Communicate, Compliance, Compliance, Governance, Oversight


What happens when you have a duty to disclose information to your shareholders and you try to hide that disclosure?

“Fox Faces Probe In Ailes Settlements,” The Wall Street Journal, February 16, 2017 B3.  Company incurs at least $35 million to deal with sexual harassment claims involving the former CEO.  But maybe they didn’t tell their shareholders enough information about these payments.

If this is happening on a big issue, what does it say about the reliability of internal reporting on other issues?  Is legerdemain acceptable corporate behavior?

Leave a comment

Filed under Access, Accuracy, Board, Collect, Communicate, Compliance, Compliance, Compliance, Corporation, Data quality, Directors, Duty, Governance, Inform market, Inform shareholders, Information, Management, Oversight, To report, Uncategorized, Value


I normally avoid picking from The Wall Street Journal‘s editorial pages, as opinion is not the level of fact within the purview of this blog.  But today provides an exception.

“So You Want to Be a Diplomat? CEO’s Need Not Apply,” The Wall Street Journal, December 13, 2016 A17.  Discussing the nomination of Rex Tillerson, the writer says:

Knowing Exxon Mobil’s highly legalistic corporate culture — according to the office grapevine [sic] infractions such as talking during a fire drill or inviting a government official to a meal that cost more than the federal gift threshold were fireable offenses [emphasis added]– I expect that Mr.Tillerson would raise the bar for ethical standards in the Trump administration.

I suspect this approach would raise the bar in just about every organization.

Does this highlight a problem with other organizations, that allow employees to violate corporate policies and procedures with impunity?  Do you have to sweat the small stuff to get the big stuff right?

Leave a comment

Filed under Communicate, Communications, Compliance, Compliance, Controls, Corporation, Culture, Duty, Employees, Governance, Internal controls, Management

Exchanging information about chickens

The exchange of price-related information between horizontally aligned competitors is often a no-no in the US.

“U.S. Poultry Producers Face Scrutiny,” The Wall Street Journal, December 12, 2016 B2.  The Georgia Department of Agriculture compiles a price index based on input from chicken sellers, but not chicken buyers.  This index is then used in establishing the prices paid by some buyers.

Is the government facilitating price fixing?  For the chicken sellers, is it risky to share price information with anybody other than the buyer?  Is this exchange contrary to company policy?  Did the lawyers approve?

1 Comment

Filed under Board, Communicate, Compliance, Compliance, Compliance, Controls, Governance, Information, Internal controls, Management