Professor Elam

Sunday april 3, 2011

We mentioned this past week that bear markets often result in  tarnished reputations. The Buffet saga continues on pages B1 and B7 of the Weekend WSJ. This got me to wondering, is there such a thing as insider trading anymore?  Barry Minkow plead guilty to securities fraud for a false report on Lennar Homes; he shorted their stock before releasing his own report. How different is that, really , from Sokol suggesting Buffet buy Lubrizol, while owning the stock himself; Sokol came out $3 M ahead but left BRK.   How different is that from FED Board Member Stephen Friedman who knew that the FED would rescue Goldman? And so he bought GS on the low in 2008 pocketing a cool million, using his inside information. He resigned from the FED but of course kept his seat at GS.  Just wondering. 

Roi Garcia, son of Raul Garcia, is accused by the Texas Education Agency of converting school funds to personal use.   Other allegations include hiring 'members of his church' who had no apparent qualifications for the jobs. Roi of course claims none of this is true and we will give him his day in court.  

You may not be the whistle blower on a Worldcom, but situations like a Charter School in San Antonio could very well happen. What controls should have been in place to keep this from happening?