Posts

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?

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?

McKenna Gives Luncheon Keynote For Professional Liability Defense Federation Annual Meeting

I was the luncheon speaker on October 10, 2013 at the annual meeting of the Professional Liability Defense Federation (PLDF). Here is the text of my remarks.

Darning Socks: Audit Report Proposal Promises More Holes Down The Road

Don’t get too excited. The same sticky issues come up every time, get tossed around and then get dropped until the next scandal or crisis provides an impetus for a discussion again.

McKenna Writes For “Investor Advocate” From Law Firm Bernstein Litowitz Berger & Grossman

BLBG publishes the Advocate for Institutional Investors, a quarterly newsletter which contains reporting and analysis of the latest securities and corporate law issues. The Advocate often features articles by the management and general counsel of some of the largest public pension funds in the country, as well as some of the nation’s premier securities litigators. This Spring the magazine also features my writing on the subject of private litigation against audit firms.

Big Four Auditors and Jury Trials: Not In The U.S.

You have to go outside of the US to see a trial of a Big Four audit firm to know what I’m talking about. Australia’s Centro case against PwC or Canada’s Nortel case where Deloitte partners testified recently tell you everything you need to know about why the Big Four will settle every time. Rather than have a jury and the public hear and see the pathetic state of the audit profession, its inability to stop executives who want to cheat, and its unwillingness to acknowledge liability as a firm when it screws up, the firms will reach into their seemingly bottomless pockets and pay up.

Will Auditors Ever Answer To Investors For Aiding And Abetting?

The House – Senate Wall Street Reform and Consumer Protection Act Conference reconvened on Tuesday, June 15 and Compliance Week says a version of the Specter Bill – to repeal the Supreme Court’s Stoneridge decision – will not be included in whatever comes out of the process. However, a coalition of state regulators, public pension funds, professors, consumers and investors and the attorneys who advise them, are still working to put something back in the bill as an amendment to restore the right of investors to defend themselves and hold white collar criminals accountable.

In Pari Delicto: Are Auditors Equally At Fault In The Big Fraud Cases?

The way I see it, the in pari delicto doctrine is being used like a pair of needle nosed pliers by audit firm defense lawyers to diffuse the bomb – huge liability for some of the biggest frauds in history. The in pari delicto doctrine attempts to pull the auditors’ tails from the fire by excusing any of their guilty acts due to the approval of those acts by potentially equally guilty executives.

Auditing Standard 5: How Now, Brown Cow?

On September 24, 2009 the Public Company Accounting Oversight Board issued a report on the first year of implementation of Auditing Standard No. 5. There’s something negative to say about each of the components reviewed.