Very recently, in Tokyo police has begun in investigation on Olympus' attempt to hide investment losses dating back to the early 1990s. The company tried to clean up its books with four different incidents within 2 years.
Aside from the police looking into this, Japan's Financial Service Agency, has launched an investigation with Olympus, this includes a hearing with auditors who signed off on Olympus' books and a government official familiar with this particular matter.
Olympus' auditor until recently in 2009 was KPMG. During the time in which KPMG was their auditor several of these transactions took place. Following the auditor of KPMG was Ernst and Young. A spokesperson for Ernst & Young stated that she is not allowed to comment on whether or not the firm is being questioned during this investigation.
Olympus needs to restate decades worth of earnings which could make it difficult for them post results for the quarter-ending. Olympus did however state to us that hid their investment losses in the early 1990s but then did try to clean it up between the years 2006 and 2008.
Since the CEO was ousted for raising questions about the four acquisitions , Olympus lost 3/4 of its market value, which could potential harm the 22,000 shareholders. If the shareholders are permanently damaged in this situation, they will turn away from investing in Japan again. Shares in Olympus has dropped dramatically to a total decline of 44%, however they are trying there best to avoid delisting.
Tokyo, Japan requires that if a company makes false statements that have a material impact, then that company is to be delisted. This is certainly a possibility for a Olympus since they covered up years of investment losses.
A senior portfolio manager at IT Investment Partners Corp. stated that markets are pricing in the fact the risk of delisting will be unavoidable, but however, political considerations could work to Olympus' advantage to help prevent the delisting.
If Olympus corrects the financial reports soon enough, much like Nikko Cordial Corp, the stock exchange could decide not to delisted the company. By doing this they could be saving themselves from covering up accounting fraud that was done purposely.
Thursday, November 10, 2011
CFTC, Liquidator to Examine MF
CFTC chairman, Gary Gensler, stated that regulators are taking all the necessary actions to get to the bottom of the shortfall of over $600 million in customer money at the securities firm MF Global Holdings Ltd. He also stated that the regulators will also "find out to the fullest extent possible the full accounting of these moneys."
Another sign of the ongoing investigation of NY securities downfall, the trustee overseeing the liquidation of MF Global seeking court approval to subpoena both current and former officers, along with both current and former directors, employees, and affiliates. The trustee is in charge of investigating the company along with employees for fraud, misconduct, and mismanagement.
PriceWaterhouse Coopers, which has been their outside auditor since 2007, gave MF Global a clean audit opinion, stating that the company's financial statements "present fairly, in all material respects." Along with this PwC also stated that MF Global's internal controls were effective and appeared to have no material weaknesses. Any fraud that occurred after the year-end audit, wouldn't necessarily be detected by the auditors.
Mr. Gensler said that segregation of customer moneys should be maintained at all times. Mr. Gensler defended the oversight agency, citing an action that resulted in a $10 million settlement.
MF Global failed to supervised risk on 4 different occasions between 2003-2008, as a result they agreed to submit an independent review of both risk management and compliance programs. At that time, they enacted procedures for risk monitoring, compliance, training, and audit procedures.
Since MF Global filed for bankruptcy it will be hard to discover the assets of thousands of business and investors, with 10 firms, who had ties to MF Global. These firms will receive a majority of the transfers and be able to distribute some back to clients. The transfers are the first step requested by the customers to receive over $5 billion assets owed to them by MF Global, with hopefully more steps to follow to help the customers get back what they lost.
Another sign of the ongoing investigation of NY securities downfall, the trustee overseeing the liquidation of MF Global seeking court approval to subpoena both current and former officers, along with both current and former directors, employees, and affiliates. The trustee is in charge of investigating the company along with employees for fraud, misconduct, and mismanagement.
PriceWaterhouse Coopers, which has been their outside auditor since 2007, gave MF Global a clean audit opinion, stating that the company's financial statements "present fairly, in all material respects." Along with this PwC also stated that MF Global's internal controls were effective and appeared to have no material weaknesses. Any fraud that occurred after the year-end audit, wouldn't necessarily be detected by the auditors.
Mr. Gensler said that segregation of customer moneys should be maintained at all times. Mr. Gensler defended the oversight agency, citing an action that resulted in a $10 million settlement.
MF Global failed to supervised risk on 4 different occasions between 2003-2008, as a result they agreed to submit an independent review of both risk management and compliance programs. At that time, they enacted procedures for risk monitoring, compliance, training, and audit procedures.
Since MF Global filed for bankruptcy it will be hard to discover the assets of thousands of business and investors, with 10 firms, who had ties to MF Global. These firms will receive a majority of the transfers and be able to distribute some back to clients. The transfers are the first step requested by the customers to receive over $5 billion assets owed to them by MF Global, with hopefully more steps to follow to help the customers get back what they lost.
Thursday, November 3, 2011
Occupy Wall Street Money Issues
The Occupy Wall Street group was originally group that was protesting and began out by just receiving donations of pizza, while they camped out in Lower Manhattan park. This group now however has received more than $500,000 in five weeks in just donations and doesn't know what to do with it.
The Occupy Wall Street protesters has received way more cash donations than anyone has ever imagined. With these donations several requests for spending have been prompted. Along with spending the donations, the money raised allowed protesters to considered taking the necessary steps to becoming an organization. This organization will be organized with both a board of directors as well as officers.
The group's finance committee has met with lawyers and accountants to determine which steps should be taken next to handle the money. Such steps include a tax-exempt status along with naming leaders and other issues. At this point in time the Occupy Wall Street can not spend any money or make any big decisions without consulting the General Assembly and a consensus is reached.
The next issue brought was having "meeting minutes show long." This was brought up with someone asking for $2,000 to have 92,000 stickers printed. This lead to many questions being asked such as why so many stickers? What are the stickers going to made of? And wouldn't be a waste of time and money to place these stickers all over the place. Over time, some stickers were purchased, but not nearly 92,000.
Currently, where the $500,000 goes is not solely up to the General Assembly. You may be wondering why not? Well according the Internal Revenue Service (IRS) the Occupy Wall Street doesn't even exist.
A few weeks ago the Occupy Wall Street group was able to gain tax-exempt status. This allowed donors to write off these contributions made. However, the Alliance for Global Justice, which granted them this status has no final say in the spending of the money and will have no say in the decision making of the spending, they will be able to intervene if they violate the tax-exempt status.
According to the finance committee of Occupy Wall Street, once donations were beginning to be received, they needed to keep documentation of this receipts and accounting for spending. They are currently working with a lawyer as well as an accountant in preparing a statement of cash flows that will soon be available online.
It seems incredible that a group who is protesting for so long was able to raise half a million dollars in just five weeks. It wouldn't be a surprise now if over time they were able to raise so much money that they need to become a real organization to keep a handle on something so simple as donations.
The Occupy Wall Street protesters has received way more cash donations than anyone has ever imagined. With these donations several requests for spending have been prompted. Along with spending the donations, the money raised allowed protesters to considered taking the necessary steps to becoming an organization. This organization will be organized with both a board of directors as well as officers.
The group's finance committee has met with lawyers and accountants to determine which steps should be taken next to handle the money. Such steps include a tax-exempt status along with naming leaders and other issues. At this point in time the Occupy Wall Street can not spend any money or make any big decisions without consulting the General Assembly and a consensus is reached.
The next issue brought was having "meeting minutes show long." This was brought up with someone asking for $2,000 to have 92,000 stickers printed. This lead to many questions being asked such as why so many stickers? What are the stickers going to made of? And wouldn't be a waste of time and money to place these stickers all over the place. Over time, some stickers were purchased, but not nearly 92,000.
Currently, where the $500,000 goes is not solely up to the General Assembly. You may be wondering why not? Well according the Internal Revenue Service (IRS) the Occupy Wall Street doesn't even exist.
A few weeks ago the Occupy Wall Street group was able to gain tax-exempt status. This allowed donors to write off these contributions made. However, the Alliance for Global Justice, which granted them this status has no final say in the spending of the money and will have no say in the decision making of the spending, they will be able to intervene if they violate the tax-exempt status.
According to the finance committee of Occupy Wall Street, once donations were beginning to be received, they needed to keep documentation of this receipts and accounting for spending. They are currently working with a lawyer as well as an accountant in preparing a statement of cash flows that will soon be available online.
It seems incredible that a group who is protesting for so long was able to raise half a million dollars in just five weeks. It wouldn't be a surprise now if over time they were able to raise so much money that they need to become a real organization to keep a handle on something so simple as donations.
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