Tuesday August 28 2018

On August 7 Elon Musk tweeted that he might take TSLA private at $420 a share. The SEC and everyone else wondered where he would get the $70 B to do that.  And the SEC wondered if this was just a stunt to boost the stock price.

Now Musk says TSLA will stay public.

Here is one observation about this behavior.

“Tesla investors must realize that they have a panicky, erratic, possibly self-destructive C.E.O. at the helm,” said Jeffrey Sonnenfeld, a professor at the Yale School of Management. “No C.E.O. is ever this confused and confusing.”

A CEO should not be tweeting about the financial future of a company that still has not shown a profit.

We study good governance in ACCT 5308 and examples of the lack of that. This is the latter category.

I have wondered if TSLA will be another Tucker or DeLorean. NOw trading around $316, JPM has lowered it stock price estimate to $195.   But if a company is not making any money, how does one come up with a specific number?

Tuesday August 28, 2018

Tansamerica settled for misleading investor paying a $36.3 M civil fine and returning $61.3 M to investors.

I caught this on page B 3 of today's WSJ, did you?

Transamerica is owned by Dutch Aegon.  Investors in mutal funds, variable life, annuities and such were told decisions would be made based on Aegon's quantitative models.

Instead

The defendants did not admit or deny wrongdoing. Aegon has said it managed $982 billion of revenue-generating investments in 2017.

According to the SEC, the quantitative models had been developed by a junior analyst with no experience in portfolio management or formal training in financial modeling.

It said employees knew in advance of errors by the analyst, citing internal emails that said "we take the hit if he screws it up."

Do you suppose anyone lost his or her job over this?  And I don't mean the jr analyst, I mean the ones who knew, and deliberately misled investors.

I doubt it.  This is what good governance is all about. We study many such cases in ACCT 5308 Ethics. And again and again, a firm is caught in an  ethical violation, admits nothing, pays a few million, and goes on down the road as though nothing happened.

Is this what should happen or should executives be held personally accountable?

See our next post about governance at Tesla TSLA.

Tuesday August 21, 2018

Look at the numerous articles posted on this blog in the Fall of  2017 and during the Ethics Class Spring 20148. WFC was guilty of creating both accounts and credit cards not requested by customers. This resulted in fees to WFC. WFC fired customer representatives who did not fill their 'quotas.  The CEO lost his job in six short weeks after the revelations but of course left  with millions gained in salary and stock options. CEO John Stumpf was out.

The bad news continues in the Wealth Advisory Service.

Along the same lines,  advisors were told to push high fee products to customers.

Ethical behavior is a lot like rust, when you spot a little on the surface, there is likely to be even more unseen beneath that surface.

Tuesday August 7, 2018

Prior to the start of the ethics class each spring I began a Who's theWorst laundry list of fraudsters I noticed in the news. I have written a business case on the Four Winds Logistics fraud and we will discuss it in class. As noted below Bates was under court order to re-pay the individuals he defrauded. Instead he accepted $256,00 from another frac sand company under an assumed name.  Needless to say the Judge was not amused and put Stan where it will be difficult to do that again. I suspect his probable sentence just got longer

You can't fix stupid

Ron White

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