Slashdot Mirror
CA's Ex-CEO Indicted on Fraud
An anonymous reader writes "CNN is carrying a story about how Sanjay Kumar, ex-CEO of Computer Associates, was indicted on fraud charges. Prosecutors said the long-running accounting fraud scheme featured what came to be known by Computer Associates employees as a "35-day month" because company books were routinely kept open until revenues exceeded projected goals. "The defendants cooked the books by simply keeping them open beyond the end of a fiscal quarter for however long it took to meet the analysts earning estimates," said Deputy Attorney General James Comey. Comey said by the time the "house of cards" collapsed, about $2.2 Billion in revenue was booked prematurely. Good thing CA settled it's case with the DOJ."
Seriously, can't the tech industry rise above this Enron-ish nonsense? Whatever happened to the old days of being ethical and honest with regard to your responsibilities to the consumer. You would think that an industry with roots in the old hacker movement that this would not be as big of an issue as in the world of business as a whole. With the problems with accounting at SCO, Adobe, Redhat, Microsoft, and now this, we should take a long hard look at what's going on now.
A late bubble bursting? A lot of innocent people are going to suffer for this: lost jobs, lost opportunity, lost credibility.
I more and more like China's answer to corrupt CEOs. They shoot them.
I prefer the "u" in honour as it seems to be missing these days.
What hasn't really made it into the press is that about $3 billion of the $12 Billion in shareholder losses at Enron were in India. Did this have anything to do with the fact that the lion's share of Enron's US IT staff were H-1b workers from India? Certainly the H-1b program gave Enron's management more rope with which to hang themselves-for example Enron had entire team software projects with no legal purpose!
(A Spectrum Article talked about that one).
Which is why, if you're homeless, you should commit a crime.
Worst comes to worse, you're in prison. At best, you get some free shit.
Seriously though, if you worked for Computer Associates at any time, and wound up homeless as a result of CEO corruption, you are even worse at managing money than I am. I know guys who were broke and been out of the workforce for YEARS who still keep up their rent.
Hey freaks: now you're ju
Please tell your professor he is an idiot.
"When is the last time the SEC or a Certified Public Accountant identified a case of major corporate fraud before the scam was so far gone it sent the company to court and probably bankruptcy?"
When dod the police catch on a planned murder (or other crime) before it is actually comitted? -- very very rarely. So should we disband the police? Or should we consider that even if they are too late to prevent a crime punishing the criminal provides justice and prevention to other criminals.
The answer is to make the SEC better and not to disband it.
"The SEC was established in the 1920s, yet there have been numerous major stock market crashes and other scams at regular intervals since, and just as many high profile corporate bankruptcies. "
Actually if my memory serves me correctly, it was established in the 30's when securities act was passed. It was established in response to the great depression and there has not been another great depression yet. Furthermore, while there are numerous examples of fraud that is not caught by the SEC, we no longer see the obvious fraud that used to happen during the robber baron ages.
"who do not scrutinize firms in the detail they should"
Scrutinizing firms in higher detail will not necessary prevent fraud. The only thing investors can do is check financial statements for inconsistencies, and the financial statements are entirely created by management. So a dishonest manager only needs to lie consistently in order to escape the deepest scrutiny.
So what is the alternative? That investors become spies and actually go to the company's offices and check on things? Well if you believe that, then 99.999% of current stock owners will not be able to invest properly, which means that the market will crash, capital will become 10x more expensive and our economy will disappear. I would rather have the SEC.
"But they are badly mistaken, the protection offered is nothing but a rubber stamp on an audit report."
Actually the protection offered should be much much greater because auditors are personally liable for any losses resulting from their lies (or screw-ups). And auditors usually have a lot of money. The only problem is that the system is so fraught with corruption, that the auditors responsible for the Enron case, and other similar disasters have been largely able to get away. For the Enron case, the DOJ dragged their feet and let Andersen consulting burn all their documents, destroying all evidence.
Again the solution is getting rid of corruption, not doing away with the system alltogether.
But there are countries that operate now pretty much the way you long for, perfect examples for laisser-faire economists.
Some examples are Iraq, Afghanistan and Russia!
"A word to the wise may be sufficient, but the truly dense need an object lesson!"
Whoa!!! Hold on there - can you go back and explain again why the government should toss myself and my coworkers onto the street for upper managements ethical/financial sins?
A corporation is more than a virtual person - its made up of thousands of people. Why should they be punished? Its bad enough the company is laying off 10% of its employees in a few weeks because of our ex-CEO's mistakes.
We used to call it "Declaring Octvember", the mythical 45-day month at the end of the fiscal year. Y'know, the reason for stretching a quarter is that the lazy financial analysts fixate on simple things like a company missing its (or their) estimates, not whether the company's fundamentals and long-term prospects are sound. When lazy analysts drive corporate decision making, prepare for a parade of stupid decisions like declaring Octvember.
About the word "if": If bullfrogs had wings, they wouldn't bounce around on their little green butts.