Cuomo sues E&Y over Lehman

[Fern]

Hogwash. They were convicted of obstruction of justice for shredding an enormous volume of Enron audit paperwork. That conviction was later set aside by the SCOTUS, and the govt declined to pursue a new trial because the firm was defunct.

What would be the purpose of frantically shredding documents ahead of a subpoena, anyway? Neatness?

Their attorney ordered it.

Guess who never got in the least bit of trouble?

Anyhoo, the shredding is an entirely differently matter than the accounting treatment of the loans stuck in foriegn partnerships and left off their Balance Sheet. That was the fundamental problem, and the accounting treatment (left off the BS) was correct according to rules at that time.

Fern

 

[Shallok]

Everybody screams about AA, but in Enron's case, as best as I can tell, they followed the rules properly. As sometimes happens, rules have 'holes' in them that are revealed as attorneys etc devise new structures and as businesses move into new markets/areas, particularly overseas. They got fvcked for no good reason. it wasn't their fault the rule in question was imperfect and allowed the Enron situation to develop.

Yeah not so much. Enron and Andersen most certainly did not follow GAAP. You should really read the Powers Report some time, you can find it pretty easily...might be educational. Or any of the many, many articles available online detailing the fraudulent actions undertaken by the two. Here's one detailing the accounting failures related to the Raptor series of SPEs.

But yeah, massive failure by Andersen, showing either collusion or incompetence across the board at the Houston office (mostly collusion). It most certainly wasn't a case of the rules being imperfect, and lets be clear that we're talking about rules, it wasn't one instance of fraud, it was multiple occurrences violating multiple rules. Everyone does tend to get hung up on the SPEs, as they were the culprit for the sudden implosion, and yes the rule that only 3% outside equity was idiotic, but Enron wasn't even following the rule and the exploitation of SPEs were certainly not the only accounting failure.

Further, even if collusion did not occur, it would still have been a monumental failure in regards to Andersen's professional responsibilities, one of the many, many failures by the then big 5, now 4. The reality is that public accounting is fucked and needs serious reform, and S&O didn't address the problems at all. So many of the accounting decisions at Enron, assuming they had actually followed the rules, would still have been utilized solely to mislead outsiders as to the company's financial standing. The same is true of Lehman's repo transactions. The auditors at E&Y covering Lehman should eb severely punished, but most likely E&Y will settle while not admitting any wrongdoing and like so many other accounting scandals nothing will change.

BTW: Accounting rules are apolitical and have nothing to do Congress etc. I suppose the SEC may have some input, but someone better versed in auditing and GAAP will have to comment. (I'm just a tax guy and long removed form auditing and GAAP)

Oh yeah totally apolitical. Congress has nothing to do with it at all. Zero Interference.

 

[Darwin333]

I read that the much smaller Savings and Loan crisis had over 700 arrests. I'm almost susprised the New York state government isn't bought off more than to do this.

My impression is that these large accounting firms are unfortunately sleazy as a rule. Part of that is just the competitive issue, if they don't do it the other guys will take the deal.

All they need to do is get a lack of enforcement from the government, and that's why we see such anti-government ideology promoted, to get such guys elected by the ignorant.

It's why we see such other issues hyped pushing for votes - Terry Schiavo, mosque near the trade center, whatever will get votes - to hide the agenda here.

Exactly how many indictments have been brought in the last two years against these assholes?

I hate to break your heart but your club is in on the scam too. I have been screaming about this for well over a year but at least your club isn't "as bad" as the other one, right? At the end of the day they are owned by the exact same masters.