According to the Securities and Exchange Commission, Brocade Communications will pay a $7 million penalty to settle charges that they performed fraudulent stock option backdating. Brocade agreed to pay to settle the charges without admitting guilt. The SEC alleges that Brocade's former chief executive and other former executives backdated stock options, misstated compensation expenses, and hid the misconduct by creating false documents.

Brocade to pay $7 mln to settle stock option fraud

"Brocade is being held accountable for the egregious and long-running misconduct of its former CEO and other former executives who misled investors and obscured the company's financial condition and performance," said the SEC.

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SEC: Brocade To Pay $7 Million Penalty To Settle Charges For Fraudulent Stock Option Backdating
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John Whittier, the founder of now-defunct hedge fund Wood River Capital Management, pleaded guilty to defrauding investors of $88 million. Whittier pleaded guilty to securities fraud and to having not filed stock holding disclosures with the U.S. Securities and Exchange Commission. Whittier could have spent more than 20 years in jail, but likely will only spend between 15 and 19 years in prison. Whittier also will lose $5.5 million.

Hedge Fund Manager Pleads Guilty to Fraud

Whittier apologized for his actions: "I knew at the time that what I was doing was wrong. I have embarrassed myself and my family and caused harm to my investors. I am sincerely remorseful." Whittier was the co-head of media and telecommunications equity research at Donaldson, Lufkin & Jenrette.

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Wood River Founder Pleads Guilty To $88M Fraud
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Posted by Patricia Bowling at 12:56 PM | Permalink | Comments (0) | TrackBacks (0)

Lorene Schaefer, a female attorney at General Electric Co., is filing a lawsuit against GE for underpaying and underpromoting its female employees. 13 GE officers and directors also are named in the lawsuit, including Chairman and Chief Executive Jeff Immelt. Schaefer's suit is hoping for class-action status and seeks $500 million on behalf of 1,500 to 1,700 female GE employees.

GE Gets Sued by Employee for Gender Discrimination

Schaefer's court papers said of her lawsuit: "This lawsuit is designed to achieve systemic injunctive relief to change GE's discriminatory pay and promotions practices and policies." GE spokesman Gary Sheffer denies the charges and says that GE will fight the allegations.

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Posted by Patricia Bowling at 12:26 PM | Permalink | Comments (0) | TrackBacks (0)

David Colby, WellPoint Inc.'s chief financial officer, has been released from the company for having violated the health insurer's code of conduct. However, Colby's policy violations were not related to the company's business and were not illegal. Because of the "non-business nature" of the actions, WellPoint did not provide any additional information. Joe Francis, a Bank of America analyst, said of Colby's departure: "The market will be upset initially about Mr. Colby's departure, because he is such a fixture in the industry, but we expect it will soon forget all this."

WellPoint CFO Out Amid Conduct Violations

Wayne DeVeydt, who has acted as WellPoint's senior vice president and chief accounting officer since March 2005, will take Colby's position. Recently Chief Executive Larry Glasscock left the company; he cited family reasons.

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WellPoint Dismisses Finance Chief, Citing Conduct
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Posted by Patricia Bowling at 12:00 PM | Permalink | Comments (0) | TrackBacks (0)

U.S. prosecutors charged four current and past Ernst & Young accountants with promoting fraudulent tax shelters. Prosecutors did not bring criminal charges against the accounting firm; however, the firm has been under criminal investigation since at least mid-2004.

Tax-Fraud Charges for 4 From Ernst & Young

Martin Nissenbaum, Richard Shapiro, Robert Coplan, and Brian Vaughn have been indicted on charges for tax evasion, conspiracy to defraud the Internal Revenue Service, making false statements to the IRS and obstructing the IRS's lawful functioning. Prosecutors say the men developed, marketed, and sold tax-shelter transactions based on "false and fraudulent factual scenarios" for six years.

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Ex-Ernst & Young Partners Accused of Tax Fraud
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Posted by Patricia Bowling at 11:36 AM | Permalink | Comments (0) | TrackBacks (0)

China's Securities Regulatory Commission plans to classify securities trading accounts as "restricted" in suspected market manipulation and insider trading cases. Accounts of this classification will be suspended for 15 days, which then can be renewed for another 15 days, depending on the regulator's approval. China's stock market has been the focus of a major insider trading investigation earlier in the month.

China to Restrict Securities Accounts in Suspected Stock Trading Fraud Cases

A former assistant investment manager with China International Fund Management Co Ltd, a joint venture between JP Morgan Asset Management and Shanghai International Trust & Investment Co LTD, is being investigated for insider trading.

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Report Says China to Boost Quotas for Foreign Investment in Shares
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Posted by Patricia Bowling at 12:47 PM | Permalink | Comments (0) | TrackBacks (0)