Quote of the Day - Finance is the art of passing money from hand to hand until it finally disappears.
It appears the defense has now gone
corporate, or perhaps a variant of it called "shrug and point." The so-called "Dumb CEO Defense" is just that - a shrug of the shoulders, coupled with a point of the finger.
You know. SODDI.
It worked for former Cendant CEO Walter Forbes. After a six-month trial and two months of deliberations in the largest securities case ever, a Hartford, CT jury deadlocked on the 16 counts against Forbes earlier this month.
It didn't work for his second-in-command, vice chairman E. Kirk Shelton, who was convicted.
Over what? According to the Law.com article, "Cendant's stock plummeted on April 15, 1998, from $41 to $7.50, wiping out $14 billion in shareholder value in a day. In what was the largest accounting scandal at the time, the company later restated $571 million in income." Cendant paid $2.83 billion to settle the shareholders' class action, and its accountants, Ernst & Young, paid $341 million to make the largest securities settlement.
Now that the dust has settled, Forbes is staring at the possibility of a retrial and his assistant, Shelton, turning "state's evidence" to lessen the penalties for the conviction.
Stay tuned for the sequel.