Saturday, April 16, 2005

Is Avarice a Crime?

Viacom Inc. disclosed the pay packages for its top three executives, and I think they are offensive, although certainly not criminal because the company's board approved them and the information has been properly disclosed. The company's proxy statement, filed yesterday with the SEC (available here), discloses that Sumner Redstone, the CEO and controlling shareholder (he owns 71% of the Class A shares), and co-presidents Tom Freston and Leslie Moonves, received the following compensation in 2004 (amounts rounded):

Redstone:  Salary $5m, Bonus $16.5m, and Stock Options $34.5m = $56 million

Freston:  Salary $4.2m, Bonus $16m, and Stock Options $32.1m = $52 million

Moonves:  Salary $5.7m, Bonus $14m, and Stock Options $32.1m = $52 million

These payments came during a year when Viacom's stock price declined over 15%, and the company's market capitalization dropped $17.5 billion.  The company stated that executive compensation is not tied to the stock price, a measure that led executives at other companies to pump up their earnings to inflate their stock price.  That said, it's hard to figure out the basis for such generous compensation, especially when Freston and Moonves are sharing a job previously held by Mel Karmazin alone.  Just to add fuel to the fire, Freston and Moonves were reimbursed by the company for the amount it would have cost to put them up in hotels while staying at homes they own in Los Angeles and New York, respectively.  There's nothing like getting paid to sleep in your own house.  The members of Viacom's compensation committee are: Robert D. Walter (Chair), Jan Leschly, Frederic V. Salerno, and William Schwartz. No, avarice is not a crime, although it can certainly lead to it. (ph)

April 16, 2005 in Media | Permalink | TrackBack (0)

Doctor Being Investigated for Providing Steroids to NFL Players Loses License

The South Carolina Board of Medical Examiners suspended the license of Dr. James Shortt for allegedly writing large prescriptions for testosterone.  Dr. Shortt is at the center of an investigation of possible steroid use by Carolina Panthers players shortly before the 2004 Super Bowl who received the drugs with prescriptions written by him.  According to the Board's Temporary Order of Suspension (available here), beginning on January 4, 2004, Dr. Shortt wrote prescriptions for four unidentified men for testosterone "in doses and frequency that were extremely unlikely to have been prescribed with any legitimate medical justification, and they were not consistent with any acknowledged medical indication for this drug . . . ."  It is not clear if the unidentified men are in fact NFL players, and Dr. Shortt has denied any wrongdoing. An AP story (here) discusses the investigation of Dr. Shortt and the football players. (ph)

April 16, 2005 in Investigations | Permalink | TrackBack (0)

IRS Employee Charged With Destroying Tax Records

The run-up to April 15 brings a wave of indictments for tax evasion, failure to file tax returns, and the like.  A different case was announced on tax day by the U.S. Attorney's Office for the District of Massachusetts involving an IRS employee, James Lewis, at the Andover (Mass.) tax processing center who allegedly detroyed tax documents.  A press release (here) states:

The Indictment alleges that LEWIS was employed by the IRS at its Andover Service Center as a Lead Clerk in the Distribution Unit. LEWIS was responsible for, among other things, processing taxpayer records, responding to taxpayer inquiries and to requests for assistance from elderly and handicapped individuals. Instead of fulfilling his duties, the indictment alleges that from January to May of 2003, LEWIS destroyed and attempted to destroy numerous taxpayer records. Such records included corrected W-2 forms and letters from taxpayers and their representatives seeking assistance.

Taxpayers depend on the IRS to process all that paper, and in most cases it is done properly -- we're the ones who make the computational errors or fill in the wrong line on the 1040.  This, however, does not inspire confidence in the system. (ph)

April 16, 2005 in Prosecutions, Tax | Permalink | TrackBack (1)

Fifth Amendment Privilege for Collective Entities

Lance Cole (Penn State) published an article in the Columbia Business Law Review (here) entitled "Reexamining the Collective Entity Doctrine in the New Era of Limited Liability Entities -- Should Business Entities Have a Fifth Amendment Privilege?".  Lance argues that the Supreme Court's interpretation of the Fifth Amendment that excludes collective entities from asserting the privilege against self-incrimination is outmoded in light of the development over the last twenty years of new limited liability business organizations:

[T]he collective entity doctrine is an anomaly of constitutional criminal law. The exploding use of new forms of limited liability business entities, and the application of the collective entity doctrine to those new entities, necessitates a re-examination of the collective entity doctrine.

Over the past few years, Justices Scalia and Thomas have called for a reassessment of the Court's Fifth Amendment privilege analysis that largely excludes documents from the constitutional protection, and the collective entity doctrine would likely be among those that could be reexamined. (ph)

April 16, 2005 in Scholarship | Permalink | TrackBack (0)

Friday, April 15, 2005

TaxProf Celebrates Its First Birthday

Paul Caron's TaxProf blog -- which he boldly proclaims has "spawned" 12 other professor blogs among other achievements -- celebrates its first birthday today (post here).  Congratulations from a grateful spawnee, and many happy 1040s! (ph & esp)

April 15, 2005 in About This Blog | Permalink | TrackBack (0)

Raytheon Submits Offer to SEC to Settle Accounting Case

Raytheon Company, a large defense contractor, has submitted an offer to the SEC to settle an accounting investigation related to revenue recognition at its commuter aircraft subsidiary.  The offer, which the SEC staff has agreed to recommend to the Commission to accept, requires the company to pay a $12 million civil penalty along with the entry of a cease-and-desist order.  Raytheon's press release (here) states that its CFO, Edward S. Pliner, will also be named in an SEC proceeding regarding the accounting, and he has been placed on leave along with another lower-level executive. (ph)

April 15, 2005 in Civil Enforcement, Securities | Permalink | TrackBack (0)

Four Former Sales Executives at Serono Laboratories Indicted for Offering Kickbacks to Doctors

The United States Attorney's Office for the District of Massachusetts (Boston) announced the indictment of four former U.S. sales executive of Serono Laboratories Inc., a biotech company headquartered in Switzerland, for offering doctors and their guests an all-expense paid trip to Cannes -- for a  medical conference, of course -- if they would write prescriptions for the company's AIDS wasting drug, which cost $21,000 for a full cycle of medication.  A press release (here) issued by the USAO describes the indictment of John Bruens, Mary Stewart, Melissa Vaughn, and Marc Sirockman, in connection with the plan to pump up sales of Serostim, which were well below the company's sales goals:

According to the Indictment, by February, 1999, the Serono business unit responsible for selling Serostim, Metabolic & Immune Therapy ("M&IT"), was falling short of its sales goals. At that time, the sales force was lead by six Regional Directors, including VAUGHN and SIROCKMAN. According to the Indictment, in March, 1999, BRUENS, STEWART and another identified in the Indictment as Executive X, a top executive in M&IT, summoned the six Regional Directors, including VAUGHN, SIROCKMAN and Adam Stupak, Regional Director for New York City, to a meeting in Boston, Massachusetts, where they were told that they were falling far short of their sales goals and needed to "dig their way out"of this fiscal crisis. The Indictment alleges that BRUENS, STEWART and Executive X ordered the Regional Directors to target select doctors to induce them to write more prescriptions related to a sales plan called the "$6m-6 Day Plan" - meaning that each Regional Director, including VAUGHN, SIROCKMAN and Stupak, were required to identify the highest prescribing physicians or "thought leaders" in their regions and target those physicians with financial incentives in order to get the required number of prescriptions to achieve the sales goal of $6 million in 6 days.

The Indictment alleges that part of the "$6m-6 Day Plan" was to offer key high prescribing doctors an all-expenses paid trip for the doctor and a guest to attend the 3rd International Conference on Nutrition and HIV Infection being held in Cannes, France for three days in April, 1999, in return for writing additional prescriptions, up to thirty, of Serostim. The cost of each prescription of Serostim induced by the offer of the trip to Cannes was for a twelve-week course of treatment valued at approximately $21,000, thus the market value of thirty scripts written by each doctor was $630,000.

One former Serono executive, Adam Stupak, entered a guilty plea in December 2004 and is cooperating in the investigation, and "Executive X" is likely cooperating too. (ph)

                                                                           

UPDATE (5/3/2007): The four defendants were found not guilty on May 3, 2007.

April 15, 2005 in Fraud | Permalink | TrackBack (0)

Round Three for Scheidler v. NOW

The long-running RICO lawsuit between NOW and anti-abortion activists has made it to the Supreme Court twice, with decisions in NOW v. Scheidler, 510 U.S. 249 (1994) (RICO does not require proof of an economic motive) and Scheidler v. NOW, 537 U.S. 393 (2003) (the Hobbs Act [as a RICO predicate racketeering activity] requires that the defendants gain property through extortion).  After a remand to the Seventh Circuit and another decision, a petition for cert. has been filed (available here) by the defendants below (Scheidler) for review on three issues:

1. Whether the Seventh Circuit, on remand, disregarded this Court’s mandate by holding that "all" of the predicate acts supporting the jury’s finding of a RICO violation were not reversed, that the "judgment that petitioners violated RICO" was not necessarily reversed, and that the "injunction" issued by the District Court not need to be vacated.

2. Whether the Seventh Circuit correctly held, in conflict with decisions of the Sixth and Ninth Circuits, that the Hobbs Act, 18 U.S.C. § 1951(a), can be read to punish acts or threats of physical violence against "any person or property" in a manner that "in any way or degree * * * affects commerce," even if such acts or threats of violence are wholly unconnected to either extortion or robbery.

3. Whether this Court should again grant certiorari to resolve the deep and important intercircuit conflict over whether injunctive relief is available in a private civil action for treble damages brought under RICO, 18 U.S.C. § 1964(c).

The third question was before the Court in Scheidler v. NOW but not reached, and would allow consideration of whether the maxim that equity should not enjoin a criminal act applies to RICO--imagine the fun the court will have with that one.  A third trip would also give the Court an opportunity to resolve a circuit split on the Hobbs Act issues, which have proven difficult for the lower courts because of the rather vague wording used by the Court in Scheidler v. NOW for the definition of extortion. Thanks to Alan Untereiner of Robbins, Russell, Englert, Orseck & Untereiner LLP for the cert. petition. (ph)

April 15, 2005 in RICO | Permalink | TrackBack (0)

DOJ Civil Division Lawyers Practicing Without a Bar License

The Legal Ethics Forum blog has a terrific post (here) about two DOJ Civil Division lawyers who were practicing without a law license while representing the government in, among other cases, a large class-action by African-American farmers against the Dept. of Agriculture alleging discrimination.  The post discusses not only the problems caused by the unauthorized practice by the two attorneys, one of whom has been charged with grand larceny, but the broader question of how the government has litigated the discrimination case and settlement procedures. The post states:

The Monterey Herald, a small California newspaper, has broken a major story involving unethical behavior by Justice Department lawyers. The DOJ is investigating one of its lawyers, Michael Sitcov, for practicing for two years on a suspended license after failing to pay bar dues. This is obviously the unauthorized practice of law (UPL) — a criminal offense in some jurisdictions and clear professional misconduct. A second attorney, Margaret O’Shea, has been indicted for fraud, for posing as an attorney in California after leaving employment at the Justice Department. Both Sitcov and O’Shea had extensive personal involvement with the litigation in Pigford v. Veneman, involving claims of racial discrimination by the Department of Agriculture against African-American farmers. Critics of the USDA, such as the Environmental Working Group, have called for the DOJ to audit the law licenses of all attorneys who have worked on the Pigford case, and have suggested that the lawyers’ lack of licenses cast doubt on DOJ’s handling of the litigation.

(ph)

April 15, 2005 in Legal Ethics | Permalink | TrackBack (0)

Thursday, April 14, 2005

The Sophisticated Means Enhancement After Booker

The Third Circuit issued an unpublished opinion in United States v. King (here) that discusses the sophisticated means enhancement in Sec. 2T1.1 of the Guidelines in light of Booker.  The defendant entered a guilty plea to tax evasion, and challenged the two-level enhancement for use of a sophisticated means, an argument the Third Circuit rejected, albeit not out of hand.  Doug Berman's keen eye caught the following footnote (see post on Sentencing Law & Policy here) addressing a Booker/Blakely issue:

Our discussion of the sophisticated means enhancement in no way suggests that a sentencing court must apply such an enhancement even where it might otherwise have been appropriate. It is clear that in the post-Booker universe, the district court is free to reject all such enhancements in the appropriate exercise of its discretion. Moreover, to the extent the sentencing court may decide to enhance a sentence based upon factors such as those incorporated into the sophisticated means enhancement, it must rely only upon conduct admitted by the defendant or found by the fact finder based upon proof beyond a reasonable. That fact finder must be a jury unless a defendant waives his/her right to a jury trial. (Emphasis supplied)

Doug raises the following issues about the Third Circuit's footnote: "Though I may be misreading this footnote, the last two sentences seem to suggest the Third Circuit is adopting the remedy of the remedial dissenters, as well as the remedy of the remedial majority in Booker.  Because the King opinion is unpublished, this Booker dicta might not be consequential in future cases.  But this confusing dicta three months after Booker is just another indication of the confusing nature of the Booker ruling."

I think the Third Circuit's approach, although buried in a footnote in an unpublished opinion (how's that for hiding you light under a bushel basket) is similar to that adopted by the Fifth Circuit in United States v. Holmes (here) concerning the Obstruction of Justice/Perjury enhancement (Sec. 3C1.1) (see earlier post here), in which the court stated:

[T]here is more than ample evidence in the record to support the district court's thorough perjury findings.  Nevertheless, because the enhancement was imposed under mandatory guidelines and the jury was not specifically asked and instructed to find beyond a reasonable doubt whether Holmes had committed perjury based on the foregoing elements, there is Booker error. So although we harbor little doubt that, if so asked and instructed, the jury would have reached the same conclusion as the district court--i.e., that Holmes committed perjury--the requisite findings cannot be projected onto the jury's guilty verdict to cure the constitutional error.

At least with regard to Guidelines enhancements that do not relate to the underlying offense conduct (e.g. loss, vulnerable victim), it appears the courts are taking more of a Blakely approach than the Booker advisory approach and requiring that the jury find the facts for the enhancement rather than just the judge.  It would be nice, as Doug points out, if there were some clear guidance in this area.  Then again, H.R. 1528 . . . . (ph)

April 14, 2005 in Sentencing | Permalink | TrackBack (0)

What You Need For a Booker Remand in the First Circuit

The First Circuit issued an opinion today in United States v. Cacho-Bonilla (here) in which it grappled with determining whether the district judge felt sufficiently constrained by the then-mandatory nature of the Guidelines to require a remand for resentencing under the (newly-threatened) discretionary system after Booker.  The defendants were convicted of mail fraud, conspiracy, money laundering, and Sec. 666 violations, and in determinig not to remand for resentencing the First Circuit has to read some sentencing tea leaves:

In any event, the district judge did not disregard their public service; he made a judgment and took it into account by sentencing at the bottom of the guidelines range. Unlike cases in which the judge expresses a desire to give a lower sentence but thinks himself constrained, the district judge in this case gave no indication that he would have gone further if he could, or that the defendants' net public contribution was insufficiently credited by the sentences given.

As for the claim that the judge perceived himself to be restricted by the guidelines but failed to say so, there might well be cases in which the judge failed to express a desire to sentence outside the guidelines range because it was useless to say anything. But of those factors that could justify greater leniency that the defendants point to on appeal, the judge considered and rejected one; and seemed to take the other into account to his satisfaction.

Finally, having given the defendants what he deemed the benefit of the doubt on the intricate amount-of-loss calculation and by imposing a sentence at the bottom of the range, the district judge went out of his way to indicate that he thought Cacho and Perez received just sentences. After saying "I have provided every break that I could," for instance, he concluded "I, therefore, feel that it is enough." And after noting that the defendants "undertook actions which were clearly illegal with the purpose of obtaining financial gain," he concluded that the "behavior merits a sentence reflective of the seriousness of the offense conduct and to provide just punishment."

It seems that the appellate courts (and counsel) are forced to look at throw-way lines and off-hand statements to figure out whether the sentencing judge felt really constrained by the mandatory nature of the Guidelines or only mildly constrained. (ph)

April 14, 2005 in Sentencing | Permalink | TrackBack (1)

More Oil-for-Food Program Indictments

The United States Attorney's Office for the Southern District of New York announced today the unsealing of an indictment of three as-yet unnamed individuals, one from Texas and the others are Bulgarian and UK citizens, along with two companies controlled by the Texan, for paying kickbacks related to the U.N.'s Iraq Oil-for-Food program.  This is the second indictment in the investigation of corruption in the program (earlier post here).  An AP story (here) discusses the information available at this time, and more should be available after U.S. Attorney David Kelley's press conference today. (ph)

                                                                            

UPDATE (4/14): An updated AP story (here) states that two of the defendants are David Chalmers, Jr., a Houston businessman who owns two oil companies (BayOil (USA) Inc. and BayOil Supply & Trading Ltd.) also named as defendants in the indictment that benefited from the alleged kickbacks by selling Iraqi oil, and Ludmil Dionissiev, a Bulgarian who is a permanent U.S. resident.  Chalmers and Dionissiev were arrested in Houston.  The third defendant, John Irving (not the author, I assume) is a UK citizen who will have to be extradited. The indictment is here (through the Houston Chronicle). (ph)

April 14, 2005 in Fraud, International, Prosecutions | Permalink | TrackBack (0)

GW Professor Pleads Guilty to Embezzling Nearly $1 Million From Grants

Former George Washington University engineering professor Nabih E. Bedewi entered a guilty plea on April 13 to embezzling $991,909 provided by federal grants to the National Crash Analysis Center that he founded. Bedewi submitted inflated invoices and had the money funneled through two companies that he owned and one which he controlled, and also paid over $31,000 to the wife of a family member who pretended to be a graduate student.  An article in the Chronicle of Higher Education (here) discusses the plea.

April 14, 2005 in Fraud | Permalink | TrackBack (0)

Lay Opposes Early Bank Fraud Trial and Seeks to Try the Case to the Court

In response to the government's request for a trial within the next two months on the severed bank fraud/false statement to a financial institution charges (see previous post here), Ken Lay has asked the court to try the bank fraud case together with the larger conspiracy/securities fraud charges next year, but have the judge rather than the jury decide them.  This is an interesting strategic move by Lay, because trying all the charges together would free up the court's time (the always appealing judicial efficiency argument) and allows him to avoid a jury, which could get caught up in the swirl of the Enron debacle and simply convict him on every count.  The problem Lay faces is that he quite publicly demanded a quick trial (the hoisting on one's own petard thing), and he requested the severance of the bank fraud charges, so Judge Sim Lake may grant his earlier wishes.  A hearing is scheduled on the government's motion on April 21, and a Houston Chronicle story (here) discusses Lay's response.

April 14, 2005 in Enron | Permalink | TrackBack (0)

The Delphi Investigation Snares GM

The SEC's investigation of Delphi has led to its former parent, General Motors, being subpoenaed for records relating to its accounting in two transactions between the company.  A Wall Street Journal article (here) describes the subpoenas as relating to a previously disclosed $237 million payment by Delphi to GM related to product recalls, and an $85 million credit from GM to Delphi related to retiree health benefits.  The issue of supplier rebates and warranty payments has come under the SEC's scrutiny in the past few months because these payments can be used as a type of "cookie jar" for companies seeking to smooth out their earnings.  The investigation of Delphi has already led to the firing of its CFO and other finance executives (see earlier post here), and there does not appear to be a quick resolution in sight yet for Delphi and other companies.  If the SEC finds any systematic abuses in the area, then the investigation is likely to spread to other auto suppliers, unwelcome news as the auto industry struggles with falling demand for its products. (ph)

April 14, 2005 in Civil Enforcement, Investigations, Securities | Permalink | TrackBack (0)

UFCW Files Complaint Against Wal-Mart

The United Food and Commercial Workers Union has filed a complaint against Wal-Mart asking the NLRB to investigate allegations that former executive Thomas Coughlin submitted false invoices to finance an anti-union campaign that included secret payments to union officials for information.  Coughlin was removed from the Wal-Mart Board of Directors in late March, having retired from his executive position in January, because of what Wal-Mart described as a number of false invoices submitted to reimburse personal expenses, totaling in a range of $100,000-500,000 (see earlier post here).  Last week, a Wall Street Journal story described Coughlin's involvement in a "Union Program" and his assertion that the invoices were to reimburse him for expenditures in fighting union organizing efforts (earlier post here).  The UFCW's letter (see press release here) to the NLRB states "the charge complains that Wal-Mart, acting through officers, employees and agents, including those at the highest levels of management, systematically denied workers their democratic right to exercise a choice for union representation.  Wal-Mart's actions seemingly involved the criminal misappropriation of company funds to create an illegal anti-union slush fund." Wal-Mart has already supplied information from its internal investigation of Coughlin to the U.S. Attorney's Office, and given the tenor of the UFCW-Wal-Mart relationship, the question of secret payments will not go away soon. (ph)

April 14, 2005 in Fraud, Investigations | Permalink | TrackBack (0)

Mother of Jackson Accuser Asserts Fifth Amendment

For the first -- and most likely the last -- time, this blog has an item related to the Michael Jackson trial.  The mother of the teenager who accused Jackson of molesting him asserted her Fifth Amendment privilege and refused to answer questions about an alleged welfare fraud.  Judge Melville permitted her to testify anyway, rejecting defense objections that the her acceptance of welfare payments that she was not entitled to receive goes to her credibility, on the ground that other evidence can be used to impeach her credibility.  That ruling seems to be a bit unusual because the alleged welfare fraud goes to her truthfulness, but then little about the trial and its surrounding circumstances comes across as normal. An AP story here discusses the ruling and the mother's testimony. (ph)

April 14, 2005 in Privileges, Prosecutions | Permalink | TrackBack (0)

The Long Journey Against Charles Zandford Ends

Charles Zandford's battle with the SEC has finally ended with a permanent bar from the securities industry, more than 15 years after he was caught stealing money from the account of a client at the brokerage firm Dominic and Dominic in Annapolis, MD.  Zandford was convicted of wire fraud in 1995 for taking money from the account of an elderly client who entrusted the funds to Zandford and his firm to care for his daughter, who suffered from psychological disorders, after his death.  Instead, Zandford converted the securities in the account into cash, and then transferred the funds into his own account.  After his conviction, the SEC went forward with its civil suit, relying on the conviction as res judicata.  Zandford challenged the securities fraud claim, arguing that the sales of the securities were legitimate, and the fraud only occurred after the transactions when he converted the funds to his personal use, and therefore was not "in connection with" the sale of a security, as required by Section 10(b) and Rule 10b-5.  The Fourth Circuit accepted that argument, but the Supreme Court reversed (SEC v. Zandford, 535 U.S. 813 (2002)), holding that the broad interpretation of that requirement adopted in Superintendent of Insurance v. Bankers Life (404 U.S. 6 (1971), was correct, that fraud essentially has to "touch" or "coincide" with a transaction in securities to come within the anti-fraud prohibitions of the federal securities laws.  The Commission received another permanent injunction and order to disgorge $343,000 against Zandford from the District Court in 2004, and the Fourth Circuit this time affirmed in December 2004.  With the time for further appeal to the Supreme Court having expired, the SEC took the final step of barring Zandford from the securities industry (administrative order here), although he is permitted to reapply after five years, but only after repaying his victims, which I suspect is unlikely. A sad tale is ended. (ph)

April 14, 2005 in Securities | Permalink | TrackBack (0)

Wednesday, April 13, 2005

The Government Indicts Government Agent

No one is above the law?  That sounds like what the government is trying to say in its latest indictment, an indictment against "a Special Agent and Chief Division Counsel for the Charlotte Division of the Federal Bureau of Investigation (FBI)."  "[A] federal grand jury sitting in the Western District of North Carolina in Charlotte, North Carolina, returned a one-count indictment charging" this agent "with making a false statement," a 1001 violation.   According to a government press release here, the indictment alleged that the accused:

"accepted benefits worth thousands of dollars from [   ], a former cooperating witness for the FBI under [the accused's] supervision. According to the indictment, the FBI squad that [the accused] was then charged with supervising was conducting a preliminary investigation of bank fraud and money laundering allegations against [the cooperating witness]. The indictment alleges that specifically, in April and August 2000, [the accused] traveled to Las Vegas, Nevada with [this witness], at [the witness’] invitation. [The witness] was responsible for all of the expenses associated with [accused’s] trips to Las Vegas, and [the accused] allegedly did not pay [the witness] for those costs. [The accused] was required by the Ethics in Government Act to report his receipt of those benefits on an Executive Branch Confidential Financial Disclosure Report. "

According to the press release, the accused is alleged to have failed to properly report the gift and travel expenses on the report and therefore violated section 1001 of title 18.

(esp)

April 13, 2005 in Prosecutions | Permalink | TrackBack (0)

More on Yesterday's Indictments of Fifteen Specialists

Yesterday fifteen specialists were indicted. (here)  The SEC also "instituted administrative and cease-and-desist proceedings against 20 former New York Stock Exchange specialists for fraudulent and other improper trading practices." (here)

Interestingly the alleged improper trades were to enrich their firms. And also of interest is that most are no longer with the firms. Many of the individuals indicted are middle-level career people (they range in ages from 36-57).  The government  will probably try to show profits to these individuals premised on increased bonuses or perks they received from the companies they were employed with.  (see more here and here)

But why so many?  Yes, the question is why are so many facing these charges?  Was this just a way of practice in the industry that the government is finally enforcing? Was the firm pressure to perform so intense that these individuals were forced to engage in this conduct?  If it were 1 or 2 individuals being indicted it is easy to call it rogue employees not following the firm directives.  But when you have so many engaged in this alleged misconduct, one has to wonder the sociological environment surrounding this alleged conduct.

(esp)

April 13, 2005 in Fraud, Prosecutions, Securities | Permalink | TrackBack (0)