Latest

@MarketWatch: IEX Becomes an Exchange

Word got out early that the SEC would approve IEX’s application to become a stock exchange on Friday the 17th. As usual, the leak traveled to the big media outlets earlier that week and then the rest of us waited for announcement from the SEC all day.

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The Big 4 And Globalization

More On My Reuters Breakingviews Column: The Andersen Tax Name Grab»

The news that a tax consulting firm made up of ex-Andersen partners would take the Andersen name garnered much media attention, as you might expect. It says something—but maybe not what the firm’s partners think— that so many years after the destruction of Arthur Andersen by criminal indictment—thirteen years—so many people care.

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A China Fraud Dissected: Part 3 AgFeed’s Trusted Advisors Protiviti and Latham & Watkins»

Company executives and directors like to believe they can purchase a posse of “trusted advisors”. Instead, they’ve often only bought a gaggle of self-interested auditors, lawyers, and consultants. But to whom does each of those vendors owe loyalty?

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A China Fraud Dissected: Part 2 AgFeed’s Auditors»

AgFeed had the benefit of two PCAOB registered and inspected audit firms. There is no indication on either the SEC or PCAOB website of an investigation of either for what happened at AgFeed. Is this one going to end badly, too, like the Gately case?

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Where I’ve Been

Speaking Engagements/Conferences»

Next Up: July 1, 2016, On a panel at the Financial Times Camp Alphaville Festival of Finance, London England. I will be talking about spotting corporate fraud with Carson Block of Muddy Waters Research on a panel moderated by the FT’s Dan McCrum.

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McKenna Interviewed By The FCPA Compliance and Ethics Report»

I was interviewed back in August by Tom Fox for his podcast on FCPA compliance and ethics issues.

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re: The Auditors is now at MarketWatch»

May 18, 2015 was my first day on the job as a reporter for MarketWatch in Washington, DC, the sister online publication to the Wall Street Journal and Barrons that focuses on retail investors. Yes, I have taken a full-time journalism job and I have moved.

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The Case Against The Auditors

Best Case Yet For Publishing Audit Partner Names: Grant Thornton’s Koeppel»

The PCAOB will vote on final rule based on its proposal on Tuesday Dec 15. If audit partner names were published in the audit report, or anywhere, the public, audit committees, investors and journalists could stop lousy auditors in their tracks. Melissa Koeppel of Grant Thornton is the best case yet for making audit partner names and their engagement history, disciplinary history, and litigation history public.

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PCAOB’s Franzel Speaks to AAA; Are Auditors’ ICFR Opinions Just “Busy-Work”?»

Auditor opinions on ICFR are not only not being done well, they are not producing warnings for investors and regulators that a material error and restatement is likely. Worse than that, when auditors get them wrong they whitewash their mistakes.

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When Auditors Get Mixed Up In M&A, Smaller Clients Get Hurt»

A new study says smaller public companies are paying a premium for the prestige of a Big Four auditor but the auditors are dangling small clients as chum for their large acquisitive shark audit clients.

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Your Career

New research: Accounting students are not generally psychopaths but some slip through»

New academic research says accounting students are less likely to be psychopaths who will commit fraud but surprising admissions by some suggest a reason to be wary.

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PwC Settles Campbell Overtime Case; Impact To Profession Is Happening Now»

PwC recently agreed to settle the Campbell v. PwC overtime class action lawsuit pending in California. I first wrote about the case on October 25, 2007. Here’s an excerpt from my wrap-up at Medium.com.

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The Saga Of Stephen Glass: A Guest Post Morality Tale From Eric Starkman»

Is it fair to “tar and feather” professionals when they are sued or only when they are convicted of crimes? How much time must pass before they can get on with their lives?

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The Big 4 And Consulting

The NYDFS Case Against Promontory and the Bigger Problem of Big Four Bank Consulting»

Bank regulators should start hiring the consultants that are responding to bank regulatory sanctions, consent decrees and NPA/DPA legal orders directly, and also strictly monitor them. It’s time to change for regulators to change their approach before another waste of time, money and public trust occurs.

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“Tax Avoidance On An Industrial Scale” Says British MP About PwC’s Luxembourg Work For AIG And Others»

British MP Margaret Hodge grilled Kevin Nicholson, of PwC’s UK tax practice, in a Parliament Public Accounts Committee hearing on Monday. You know you’re on your “back foot” when the first thing out of your mouth has to be a denial that you lied under oath. More details about PwC’s tax avoidance scheme for audit client and US government owned AIG.

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Luxembourg Tax Leaks Put PwC On The Defensive»

My latest column at Medium.com responds to PwC’s #LuxLeaks defenses: Illegal docs, legal advice. I also raise the obvious auditor independence issues which no one else is reporting.

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Writing for Others

Duped By Fake Documents? All In A Day’s Work For Some Journalists»

I could not resist writing at Medium.com about the teen trader who recently duped a journalist from New York magazine into believing he had made $72 million trading gold and other alternative assets. It’s not like auditors don’t get fooled every day by fake documents.

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Update: The Shoemaker’s Children… The Big Four And Their Own Broker-Dealers»

Did you know that each of the Big Four audit firms and some of the next tier also run SEC-registered broker-dealers? You’ll never guess who audits them.

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McKenna At Medium: Two New Columns For the Bull Market Collection»

I’m part of a group effort at Medium.com called “Bull Market”. The first two columns are about taxes—the inversionist avoidance kind and one corporation’s horrible allergy to them.

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You Can Quote Me On That

@MarketWatch: Interactive Brokers Weathers Brexit Well»

When I saw, as I was monitoring Twitter late Thursday night, that “Go” would prevail over “Remain” I came into work on Friday morning with a different idea for a story about Interactive Broker than I had originally planned.

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Appeals Court says SAIC must face CityTime fraud case»

An Appeals Court said there’s enough to proceed on allegations SAIC recklessly disregarded its obligation to disclose potential liability for the CityTime fraud in its March 2011 10K.

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Three Accounting-Related Stories At MarketWatch»

At MarketWatch I am fortunate that I am not expected to write a story every day, although that’s fine if something comes up like an SEC enforcement order or a spectacular corporate scandal.  I am encouraged, instead, to come up with original analysis of important stories in financial regulation and legislation. We want to add […]

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Food for Thought

Update: Writing About Equity Market Structure at MarketWatch»

One area I am covering now at MarketWatch is market structure, specifically the equity markets. Reforming equity markets is a big ongoing issue, especially after the May 2010 flash crash. Here’s a summary of the articles, updated for a new one on February 3, I’ve written since May on the subject and some background on some of the many controversies.

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Failure to Earn: What Scattershot Enforcement of Sarbanes-Oxley Clawbacks Tells Us About Paybacks Under Dodd-Frank»

I wrote at MarketWatch about the SEC’s proposed Dodd-Frank clawback rule.

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New Orleans January 2008: "He leadeth me beside still waters…"»

I went to New Orleans in January 2008 for a few weeks to work with Habitat for Humanity building new houses. Here’s a slide show of what I saw three years after Katrina in the 9th Ward New Orleans LA.  Just went down on my own and joined a random group.  There was still a […]

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