Weekend October 17 2020

I don't know if this links as it is through our University Library and I had to log in but

https://search-proquest-com.tamusa.idm.oclc.org/news/docview/2451495587/fulltext/B06F603601D4050PQ/3?accountid=130967

There is a front page article in the Weekend WSJ about Luckin, Wirecard and two mid east firms all of which are failed audits and all of which

belong to EY. Actually this is right on time, consider

Enron happened right after the dot.com peak in March 2000. The resulting fall out took down Arthur Andersen and gave us SARBOX.

Nine years later we had Bernie Madoff and the sub prime crisis. Goldman had to issue a $1 B preferred stock to Warren Buffet to stay in business.  Goldman is back to reporting big profits.  This followed a market peak in Fall 2007.  That brought us Dodd Frank.

Now another ten years later, the stock market is recording another record run. And right on time we have another auditor scandal this time courtesy of EY and various mis steps by KPMG the last few years.

The article mentions that many ex EY personnel sit on the Board so firms EY audits. And that EY seeks new tech firms. Gee sounds like an echo of Enron which claimed it had new ways of doing business as well.

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And in  the weekend journal there is a Carlo Ponzi Retrospective, the  100th Anniversary

https://search-proquest-com.tamusa.idm.oclc.org/news/docview/2451495641/F073537C4809400FPQ/1?accountid=130967

Thursday Oct 15 2020

I don't usually agree with Elizabeth Warren but in this case she is right.  She wrote a five page letter to Bob Iger at Disney.

Disney has laid off 28,0000 employees at its theme parks. Now it is restoring top exec pay.  In the past few years it spent $47 B buying back its own stock to increase the share price.  And of course that has weakened the financial position of the company.

As social mood grows more negative expect more such protests.

Thursday Oct 15 2020

Wells Fargo says it's fired workers who bilked a federal coronavirus relief program. A source tells CBS News 100 to 125 workers were shown the door.

Thursday Oct  15 2020

Pilgrim’s Pride, the nation’s second-largest chicken processor, agreed to a $110.5 million fine with the U.S. Department of Justice in their role to mark up prices of poultry which it then passed along to consumers and businesses.

Gross sales are about  $11 billioi..So the fine is about  1% of gross.

Now, here is the humorous part.

The plea deal money is to be listed as a “miscellaneous expense” in its next quarterly report according to a release by the company.

Thursday Oct 15 2020

Federal banking regulators on Wednesday slapped USAA Federal Savings Bank with an $85 million fine for “violations of law” that were “part of a pattern of misconduct.”

The civil penalty stems from a consent order that the Office of the Comptroller of the Currency, which regulates federally chartered banks, issued in January 2019. The agency tagged USAA Bank for “engaging in unsafe or unsound banking practices.”

The OCC found USAA Bank’s internal controls and information technology systems did not comply with certain guidelines. The bank also failed to implement and maintain a risk management program sufficient for a bank its size.

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I must say I am surprised.  USAA is a well run organization. But its banking business has grown quickly now at $100.8 Billion in assets. This seems to follow a pattern. Once a company decides it wants to be the biggest, problems erupt from just that, growing faster than controls can be pput in place.  In the auto world GM VW and Toyota are all examples. JP Morgan Chases fine of $920 M for trading violations is another example.

Tuesday Oct 13 2020

Learn about the El Centro Fraud.

El Centro was a City of San Antonio project to further develop portions of downtown San Antonio.

The Deputy City Mgr was made the CEO.

El Centro hired a 'book keeper without any background check.

Read the disastrous results.