The following assignment is due Tuesday, October 11, 2004.

Select three companies or people that you would like to do
res...
Arthur Andersen
On June 15, 2002, a jury found the accounting firm guilty of obstructing justice when it shredded
Enron do...
• Citigroup
• J.P. Morgan Chase
• Schering Plough
• Bristol-Myers Squibb
• Johnson & Johnson
• Kmart
• Adelphia
• Merrill ...
Global Crossing
Federal regulators and law-enforcement officials are investigating whether the company used "swap
deals" w...
Salomon Smith Barney
The investment bank, a unit of Citigroup, has been asked to turn over documents to the House
Financia...
Earlier, the Wall Street brokerage in May agreed to pay $100 million to settle New York state's
charges that its research ...
Executives in Trouble

• Sam Waksal
-- ImClone (former CEO)
• Martha Stewart
-- Martha Stewart Omnimedia
• John Rigas
-- A...
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Oral Presentation Topics

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Oral Presentation Topics

  1. 1. The following assignment is due Tuesday, October 11, 2004. Select three companies or people that you would like to do research on for your oral presentation. For each of your selected topics find and read one or more newspaper or magazine articles. Write one paragraph on why you chose those people or companies. Site the articles you read. You may choose from the list below or select from other companies or people that interest you. Worldcom Waste Management Arthur Andersen Enron Cendant Xerox Sunbeam Tyco Baptist Foundation Adelphia Health South Global Crossing Quest Imclone Merril Lynch Fife Symington Charles Keating
  2. 2. Arthur Andersen On June 15, 2002, a jury found the accounting firm guilty of obstructing justice when it shredded Enron documents. On Oct. 16, a federal judge imposed the maximum sentence -- a $500,000 fine and five years' probation, but that was largely a formality since the firm already had lost most of its clients. The company vowed to appeal. Merrill Lynch The Wall Street brokerage in May agreed to pay $100 million to settle New York state's charges that its research analysts publicly hyped stocks they privately ridiculed in order to win business for Merrill's investment banking unit. Separately, Merrill Lynch is being investigated by several congressional committees looking into whether the brokerage along with some of the nation's other big commercial and investment banks helped Enron manipulate its books. Citigroup The No. 1 financial services company in September agreed to pay $240 million to settle predatory lending charges in the largest consumer protection settlement in the history of the Federal Trade Commission. The FTC had sued Associates First Capital Corp., which Citigroup acquired for $27 billion in November 2000. CSFB Credit Suisse First Boston Corp. agreed last January to pay $100 million for taking millions of dollars from customers in inflated commissions in exchange for allocations of "hot" initial public offerings. Xerox Xerox was forced to restate earnings to reflect $1.4 billion less in pre-tax profits over the past five years as part of a settlement with the SEC which also included a $10 million penalty. Piper Jaffray The NASD fined U.S. Bancorp Piper Jaffray and a managing director a total of $300,000 for allegedly telling a drug company the securities firm would drop research coverage if the firm was not used as a stock offering underwriter. Under Investigation: • Enron • WorldCom • Qwest • Tyco • ImClone • Global Crossing • Dynegy • CMS Energy • El Paso Corp. • Halliburton • Williams Cos. • AOL Time Warner • Goldman Sachs • Salomon Smith Barney
  3. 3. • Citigroup • J.P. Morgan Chase • Schering Plough • Bristol-Myers Squibb • Johnson & Johnson • Kmart • Adelphia • Merrill Lynch • Rite Aid Corp. Enron Once the nation's seventh-largest company, Enron obscured its finances with a complex web of partnerships and questionable accounting practices that fooled debt-rating agencies, Wall Street analysts and investors. When the house of cards finally collapsed last year, Enron was forced to file for bankruptcy, causing huge losses for investors and Enron employees, many of whose company 401(k) accounts became nearly worthless. Arthur Andersen, Enron's former accounting firm, was convicted in June 2002 of obstructing justice for destroying documents related to Enron. And in October 2002, former Enron CFO Andrew Fastow was charged with fraud after another executive, Michael Kopper, pleaded guilty in August to money- laundering and fraud charges and agreed to cooperate with prosecutors. More charges are expected in the Enron case. WorldCom WorldCom, which in July 2002 filed the biggest bankruptcy in U.S. history, has admitted it overstated profits by hiding more than $7 billion in expenses over five quarters. Several former WorldCom executives have been charged, including former finance chief Scott Sullivan, who has pleaded not guilty to securities fraud. Former finance and accounting executives David Myers, Buford Yates, Betty Vinson and Troy Normand all have pleaded guilty and are expected to cooperate with prosecutors. Bernard Ebbers, WorldCom's co-founder and former CEO, is facing separate scrutiny for allegedly profiting improperly from hot IPOs doled out by brokerages in return for investment banking business. Qwest Qwest is being investigated by the U.S. Attorney's office in Denver and by the Securities and Exchange Commission. The company admitted in July that it had improperly accounted for about $1.2 billion in revenue for part of 2000 and all of 2001, most of that from "swap deals" it made with other telecom carriers. The company restated $950 million in revenue derived from selling network capacity to other carriers and buying back a similar amount, an accounting method the SEC has called improper. Tyco Former CEO Dennis Kozlowski and fomer CFO Mark Swartz have been charged with looting $600 million from Tyco as federal regulators continue to probe Tyco's finances. Both men have pleaded not guilty. Separately, Tyco has sued Kozlowski, who engineered much of the conglomerate's growth through acquisitions, for at least $730 million, and brought in a new CEO, Edward Breen, to try to clean up Tyco's image. ImClone Sam Waksal, former CEO of ImClone, was arrested on charges of insider trading for allegedly trying to sell his stock and tipping off family members after learning the federal Food and Drug Administration (FDA) would refuse to review the company's application for promising cancer drug Erbitux.
  4. 4. Global Crossing Federal regulators and law-enforcement officials are investigating whether the company used "swap deals" with other telecom carriers to inflate sales. At issue: deals to sell capacity on its fiber-optic network to other carriers while concurrently buying back a like amount. Global Crossing filed for Chapter 11 bankruptcy protection in January. In August, it agreed to sell a majority stake in its fiber-optic network to two Asian investors for about $250 million in cash. Dynegy Enron rivals, including Dynegy, El Paso Corp., CMS Energy, Halliburton and Williams Cos., have come under scrutiny because of their own questionable accounting and trading activities. CMS Energy Enron rivals, including Dynegy, El Paso Corp., CMS Energy, Halliburton and Williams Cos., have come under scrutiny because of their own questionable accounting and trading activities. El Paso Corp. Enron rivals, including Dynegy, El Paso Corp., CMS Energy, Halliburton and Williams Cos., have come under scrutiny because of their own questionable accounting and trading activities. Halliburton Enron rivals, including Dynegy, El Paso Corp., CMS Energy, Halliburton and Williams Cos., have come under scrutiny because of their own questionable accounting and trading activities. In Halliburton's case, the investigation involves an accounting practice introduced at the company when it was run by Vice President Dick Cheney. Williams Cos. Enron rivals, including Dynegy, El Paso Corp., CMS Energy, Halliburton and Williams Cos., have come under scrutiny because of their own questionable accounting and trading activities. AOL Time Warner Both the SEC and the Justice Department are looking into questionable accounting practices at the company's Amerca Online unit in 2000 and 2001. The company said in an August 2002 SEC filing that it was investigating whether $49 million in advertising and commerce revenue had been improperly recorded. When three former top executives of Homestore Inc. pleaded guilty in September to inflating the online real estate company's revenues through deals with other companies, authorities said that they were continuing an investigation into transactions between Homestore and a "major media company." AOL had a business relation with Homestore, and published reports said AOL was the target of the federal probe. An AOL spokesman denied the company did anything wrong in its relationship with Homestore. Goldman Sachs The investment bank has been asked to turn over documents to the House Financial Services Committee, which is looking into analyst conflicts of interest and the distribution of stock as companies went public.
  5. 5. Salomon Smith Barney The investment bank, a unit of Citigroup, has been asked to turn over documents to the House Financial Services Committee, which is looking into analyst conflicts of interest and the distribution of stock as companies went public. Citigroup Members of the Senate's Permanent Subcommittee on Investigations in July charged that the No. 1 financial services company helped Enron manipulate its finances to deceive investors. J.P. Morgan Chase Members of the Senate's Permanent Subcommittee on Investigations in July said that Morgan helped Enron with more than $8 billion in complex financing arrangements that made Enron look rich in cash rather than heavily indebted. Schering Plough The drugmaker, facing questions about the timing of a profit warning, said in October that the SEC has asked it for information regarding meetings with its investors. Bristol-Myers Squibb Bristol-Myers Squibb said in October 2002 it will restate sales by $2 billion, but federal regulators are still investigating whether the No. 4 U.S. drugmaker purposely inflated sales by offering incentives to wholesalers. Johnson & Johnson The FDA is investigating a former employee's allegations of false record-keeping at a J&J plant that makes an anemia drug linked to serious side effects. Kmart Kmart, the nation's No. 4 retailer, filed for Chapter 11 bankruptcy protection on Jan. 22, 2002, after succumbing to fierce competition from Wal-Mart, Target and other discount chains. The FBI and the SEC are looking into issues surrounding Kmart’s bankruptcy. The company, which is also conducting an internal review of ex-CEO Chuck Conaway’s activities, has closed hundreds of stores and cut 22,000 jobs as it attempts to reorganize. Adelphia Communications The nation's No. 6 cable company filed for bankruptcy protection in June 2002 after billions of dollars in loans to cover investment losses by the family of founder John Rigas came to light. After Rigas, two of his sons and two other former executives were arrested in July to face criminal and civil charges related to their use of company funds, Adelphia filed its own racketeering lawsuit against Rigas and other members of his family and family-controlled businesses, seeking the return of assets. The company faces civil charges by the SEC and an ongoing Justice Department probe, though no criminal charges have been filed against the company. Merrill Lynch Merrill Lynch is being investigated by several congressional committees looking into whether the brokerage along with some of the nation's other big commercial and investment banks helped Enron manipulate its books.
  6. 6. Earlier, the Wall Street brokerage in May agreed to pay $100 million to settle New York state's charges that its research analysts publicly hyped stocks they privately ridiculed in order to win business for Merrill's investment banking unit. Rite Aid Corp. Three former Rite Aid executives and one suspended executive were indicted in June 2002 on charges that they cooked the books of the No. 3 drugstore chain to make it appear more profitable. In 2000, the company restated results going back three years.
  7. 7. Executives in Trouble • Sam Waksal -- ImClone (former CEO) • Martha Stewart -- Martha Stewart Omnimedia • John Rigas -- Adelphia (former CEO) • Dennis Kozlowski -- Tyco (former CEO) • Bernard Ebbers -- WorldCom (former CEO) • Philip Anschutz -- Qwest • Joseph Nacchio -- Qwest (former CEO) • A. Alfred Taubman -- Sotheby's (former Chairman) • Stephen Garofalo -- Metromedia Fiber Networks (Chairman) • Clark McLeod -- McLeod USA (former CEO)

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