The National Law Journal has an "NLJ Roundtable" entitled "After Sarbanes-Oxley" that includes some very funny and insightful remarks from MoFo's Jordan Eth.  I urge you to read the whole thing but here are some excerpts:

• "First issue. Fraud is still illegal.... You know how many securities class actions get filed against companies every year? Roughly 200. You know how many before Sarbanes-Oxley? Roughly 200. You know how many before the reform act? Roughly 200. It's the speed of Bill Lerach's printing press. I mean, it's not all these statutes."
• "Here's one thing you've got in Sarbanes-Oxley. You now have a longer statute of limitations. Now, what does that have to do with Enron and WorldCom? It's usually considered slow if a plaintiffs' lawyer files in 48 hours rather than 24 hours. So did we really need a new statute of limitations?"
• "Before Sarbanes-Oxley, about 3% or 4% of cases had class periods of three years or longer. Now, it's about 20%. Nothing like working on a case where you've got a 4 1/2-year class period. And no one who worked there even knows what's going on, and the systems are changed, and the software is different, and the damages are higher, and it's harder for you to insure the risk because you don't even know how long we could be sued for something we said 4 1/2 years ago? What was going on 4 1/2 years ago? Well, that's a problem."
• "As a litigator, I will tell you that you know documents are just the bane of our existence. Never write when you can speak. Never speak when you can wink."
• "Used to be that . . . the SEC had to prove you were substantially unfit to serve as a director, and then you can be barred from doing that in the future. They've gotten rid of the word substantially. I guess now you could be minimally unfit, barely unfit, and they could bar you. "

Tuesday, December 20, 2005

"Ode to a Fraud"

Compliance Week editor and publisher Scott Cohen provides a humorous look at Sarbanes-Oxley, the SEC, activist investors, and whomever else gets in his way in the holiday-themed poem below. 

A sample of his SOX-flavored version of "'Twas the Night Before Christmas":

Constructed in summer and fostered in fall,
‘Twas daring, audacious ... the nerve and the gall!
A plan based on timing, by my own admission,
advanced by the exodus from the Commission.

Yes, SEC veterans, bailing, they flew,
On Goldschmid! On Cutler! On Donaldson, too!
With turnover rampant, and chaos set in,
at last my deception, my scam, could begin!

My goal was pure evil, a dastardly deed,
a scandalous racket inspired by greed.
‘Twas really quite simple, but one that still shocks:
to undermine every provision of SOX.

The entire "Ode To A Fraud; A Humorous Take On SOX" is available here.

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Thursday, November 17, 2005

More Parting Words from the Former Outback CFO

Back in April 2005, Bob Merritt, who had at that time been the CFO of Outback Steakhouse for over 15 years, dramatically resigned from the company during the quarterly conference call because of his resentment of the

increasingly negative regulatory environment in which we now operate. The recent lunacy over lease accounting, as an example, took me past the breaking point and has convinced me that the environment is not going to get any better any time soon.

I view the recent accounting fiasco as a complete failure of regulatory and other bodies which oversee financial accounting and reporting.

Merritt's resignation was discussed in detail at that time at Ideoblog and elsewhere.  Now Merritt is back with more in this article entitled "The Sarbanes-Oxley Act: A Personal View," in which he concludes by stating that he knows "of no seasoned public company CFO who has not thought of making a career change at this point."

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