Latest news with #WorldCom
UPI
13-07-2025
- Entertainment
- UPI
On This Day, July 13: Live Aid concerts raise $125M for famine relief
1 of 5 | Singer Bob Geldof, pictured in 2005 at the Live 8 Concert in Hyde Park in London, organized the benefit concert Live Aid held July 13, 1985, in London and Philadelphia. File Photo by David Silpa/UPI | License Photo July 13 (UPI) -- On this date in history: In 1863, opposition to the Federal Conscription Act triggered New York City riots in which at least 120 people died and hundreds were injured. In 1898, Guglielmo Marconi was awarded a patent for wireless telegraphy -- the radio. In 1943, one of the largest tank battle in history -- which happened as part of the Battle of Kursk -- ended along the Eastern Front in the Soviet Union when German dictator Adolf Hitler redeployed his troops to the south. In 1960, Democrats nominated Sen. John F. Kennedy of Massachusetts for president against GOP Vice President Richard Nixon. John F. Kennedy (R) and Richard Nixon debate on October 21, 1960. UPI File Photo In 1977, a state of emergency was declared in New York City during a 25-hour power blackout. In 1985, musicians and celebrities gathered at arenas in London and Philadelphia to hold a 16-hour Live Aid concert, raising more than $125 million in famine relief for Africa. In 1992, Yitzhak Rabin became Israel's new prime minister, ending the hard-line Likud Party's 15-year reign. Rabin embraced Israeli-Palestinian relations and helped establish peace between Palestinians and Jordanians. He faced criticism for his views and in 1995 was assassinated. In 1998, Japanese Prime Minister Ryutaro Hashimoto resigned, a victim of the country's economic woes. In 2005, a judge in New York sentenced former WorldCom Chief Executive Officer Bernard Ebbers to 25 years in prison for his part in what was described as the largest fraud in U.S. corporate history. File Photo by Monika Graff/UPI In 2008, the U.S. Treasury Department announced a plan to save major government-backed mortgage companies known as Fannie Mac and Freddie Mac with billions of dollars in investments and loans. In 2013, neighborhood watch volunteer George Zimmerman was acquitted in the 2012 shooting death of unarmed black teenager Trayvon Martin in a gated community in Florida. The case provoked a national debate on "stand your ground" laws and racial profiling. In 2019, Simona Halep became the first Romanian to win a Wimbledon singles title after beating Serena Williams. In 2024, Donald Trump was grazed on the ear by a bullet during a presidential campaign rally in Pennsylvania. The would-be assassin, Thomas Matthew Crooks, also killed a member of the audience and injured two more. Law enforcement shot and killed Crooks. File Photo by Bonnie Cash/UPI
Forbes
11-06-2025
- Business
- Forbes
The GOP Wants To Stop A Major Accounting Regulatory Body
Audit Envelope Are You Prepared on white paper an yellow envelope holding by human hands The Trump administration and congressional Republicans seem intent on peeling back some basic regulatory framework introduced by the Sarbanes-Oxley Act in 2002. They argue that the burden on companies is too heavy and, by removing the regulations, corporations would be free to invest, expand, and grow the economy. The arguments are understandable but ultimately unconvincing. For large corporations, the amounts they devote to compliance are proportionately trifling, and some of the biggest coherent additions to the regulatory framework happened at the start of what would become share increases in corporate profits. You may have never heard of the PCAOB, or Public Company Accounting Oversight Board. It was part of the Sarbanes-Oxley Act of 2002, a whiplash response to the dot-com implosion and the massive financial fraud by such companies as Enron, Adelphia, and WorldCom, that part of it. To give a sense of how bad it was, in 2003, I wrote about the challenges replacement CEOs at such companies faced in trying to stabilize the businesses. One example was Bill Schleyer, an experienced executive and venture capitalist with an MBA from Harvard, who became chair and CEO of Adelphia Communications. He told me about his experience listening to the head of accounting talk about the previous management bookkeeping. 'I thought he was joking,' Schleyer remembered. 'I didn't think that anyone could be that Machiavellian to dream up those accounting practices.' Sarbanes-Oxley was unusual among many regulatory packages as it focused on financial reporting accuracy and executive accountability, according to That includes chief executive officers and chief financial officers signing off on the accuracy of financial statements. (There were many complaints from corporations at the time about the sign-off requirements. It's impossible to read people's minds, but perhaps an aversion of top executives to personal guarantees of produced information might have had something to do with it.) It's not the first time people have tried to eliminate the PCAOB. The first Trump administration had undertaken a 'virtual gutting,' as Forbes contributor Robert G. Eccles wrote in 2021. AccountingInsights notes that the PCAOB has had a positive impact by creating a 'shift towards a more rigorous and structured approach to auditing.' The body has emphasized corporate internal controls and risk factors, 'requiring auditors to adopt a more analytical and skeptical mindset.' The quality of audits is of particular import for the public markets. They help ensure better information and transparency that investors, large and small, use to better their portfolios and strategies. The PCAOB announced in March 2025 the results of inspections in 2024. The aggregate deficiency rate of corporations audited by the six U.S. Global Network Firms dropped eight percentage points, from 34% in 2023 to 26% in 2024. The aggregate rate for the firms audited by the four largest firms dropped six percentage points from 26% in 2023 to 20%. Those Big Four firms audit about 80% of the market capitalization of public companies listed on exchanges. Companies may complain about regulation, but contrary to their criticisms, regulations seem to help improve profits. Below is a graph from the Federal Reserve Bank of St. Louis. It shows pre-tax profitability of U.S. corporations at different times. U.S. corporate pre-tax profits The gray bars are periods of recession. Notice how post-recession growth more or less continued a longer pre-recession trend until after the 2001 recession. As the country exited that period, growth in corporate profits shot upward at a quick pace. That started around when the U.S. passed Sarbanes-Oxley into law. Another example is how the country came out of the Global Financial Crisis. The Dodd-Frank Act, which was the regulatory reaction to the excesses and risky behavior that had just passed, was signed into law in 2010. At the same time, there was another sharp boost in corporate profits. There is no way to show that Sarbanes-Oxley or Dodd-Frank was the cause of the profit growth spike after each, but it is clear that, at least, neither seemed to inhibit business. Dr. Albert Schweitzer, the famous physician and humanitarian, was also a musical scholar and organist. In his two-volume biography of Johann Sebastian Bach, he discussed the difference between what he called objective art and subjective art. In music, he said that musicians who redefined forms and rules were subjective artists. By that, he meant they changed things around them to create. Bach, however, was, in Schweitzer's eyes, an objective artist. He followed strict rules that pushed him into himself where he worked around the restrictions to create things that had never been heard before. Perhaps financial regulation is similar. Corporate executives and boards want flexibility to do what they wish, but that doesn't focus innovation and strategy the way needed regulations did. Wiping away what has been successful is a mistake, no matter how many businesspeople want to eradicate constraints on themselves.
Forbes
10-06-2025
- Business
- Forbes
The GOP Wants To Stop Major A Major Accounting Regulatory Body
The Trump administration and congressional Republicans seem intent on peeling back some basic regulatory framework introduced by the Sarbanes-Oxley Act in 2002. They argue that the burden on companies is too heavy and, by removing the regulations, corporations would be free to invest, expand, and grow the economy. The arguments are understandable but ultimately unconvincing. For large corporations, the amounts they devote to compliance are proportionately trifling, and some of the biggest coherent additions to the regulatory framework happened at the start of what would become share increases in corporate profits. You may have never heard of the PCAOB, or Public Company Accounting Oversight Board. It was part of the Sarbanes-Oxley Act of 2002, a whiplash response to the dot-com implosion and the massive financial fraud by such companies as Enron, Adelphia, and WorldCom, that was a part. To give a sense of how bad it was, in 2003, I wrote about the challenges replacement CEOs at such companies faced in trying to stabilize the businesses. One example was Bill Schleyer, an experienced executive and venture capitalist with an MBA from Harvard, who became chair and CEO of Adelphia Communications. He told me about his experience listening to the head of accounting talk about the previous management bookkeeping. 'I thought he was joking,' Schleyer remembered. 'I didn't think that anyone could be that Machiavellian to dream up those accounting practices.' Sarbanes-Oxley was unusual among many regulatory packages as it focused on financial reporting accuracy and executive accountability, according to That includes chief executive officers and chief financial officers signing off on the accuracy of financial statements. (There were many complaints from corporations at the time about the sign-off requirements. It's impossible to read people's minds, but perhaps an aversion of top executives to personal guarantees of produced information might have had something to do with it.) It's not the first time people have tried to eliminate the PCAOB. The first Trump administration had undertaken a 'virtual gutting,' as Forbes contributor Robert G. Eccles wrote in 2021. AccountingInsights notes that the PCAOB has had a positive impact by creating a 'shift towards a more rigorous and structured approach to auditing.' The body has emphasized corporate internal controls and risk factors, 'requiring auditors to adopt a more analytical and skeptical mindset.' The quality of audits is of particular import for the public markets. They help ensure better information and transparency that investors, large and small, use to better their portfolios and strategies. The PCAOB announced in March 2025 the results of inspections in 2024. The aggregate deficiency rate of corporations audited by the six U.S. Global Network Firms dropped eight percentage points, from 34% in 2023 to 26% in 2024. The aggregate rate for the firms audited by the four largest firms dropped six percentage points from 26% in 2023 to 20%. Those Big Four firms audit about 80% of the market capitalization of public companies listed on exchanges. Companies may complain about regulation, but contrary to their criticisms, regulations seem to help improve profits. Below is a graph from the Federal Reserve Bank of St. Louis. It shows pre-tax profitability of U.S. corporations at different times. U.S. corporate pre-tax profits Federal Reserve Bank of St. Louis The gray bars are periods of recession. Notice how post-recession growth more or less continued a longer pre-recession trend until after the 2001 recession. As the country exited that period, growth in corporate profits hot upward at a quick pace. That started around when the U.S. passed Sarbanes-Oxley into law. Another example is how the country came out of the Global Financial Crisis. The Dodd-Frank Act, which was the regulatory reaction to the excesses and risky behavior that had just passed, was signed into law in 2010. At the same time, there was another sharp boost in corporate profits. There is no way to show that Sarbanes-Oxley or Dodd-Frank was the cause of the profit growth spike after each, but it is clear that, at least, neither seemed to inhibit business. Dr. Albert Schweitzer, the famous physician and humanitarian, was also a musical scholar and organist. In his two-volume biography of Johann Sebastian Bach, he discussed the difference between what he called object art and subjective art. In music, he said that musicians who redefined forms and rules were subjective artists. By that, he meant they changed things around them to create. Bach, however, was, in Schweitzer's eyes, an objective artist. He followed strict rules that pushed him into himself where he worked around the restrictions to create things that had never been heard before. Perhaps financial regulation is similar. Corporate executives and boards want flexibility to do what they wish, but that doesn't focus innovation and strategy the way needed regulations did. Wiping away what has been successful is a mistake, no matter how many businesspeople want to eradicate constraints on themselves.
New York Times
27-05-2025
- Business
- New York Times
Remember Enron and WorldCom? Let's Not Do That Again.
More than two decades ago we blew the whistle at Enron and WorldCom, industry giants whose spectacular falls revealed two of the largest accounting fraud scandals in American history. We know the destruction that fraud causes. We lived through it. We witnessed how unchecked power, collusion at the highest levels and manipulated financial statements can bring down iconic companies, destabilize markets and vaporize billions of dollars and thousands of jobs overnight. That's why we are raising our voices now against a proposal by Republican lawmakers to eliminate the Public Company Accounting Oversight Board, a watchdog that Congress created in the wake of those scandals to protect against accounting fraud and audit failure. The rollback of this hard-won safeguard would unleash additional risk into this highly uncertain economic environment and make the next corporate disaster more likely. The collapse of Enron and WorldCom exposed a broken system for verifying financial honesty. Before the P.C.A.O.B., accounting firms essentially policed themselves. That system failed in part because they often earned far more money selling advice to the same clients than they did from auditing. As a result, firms were sometimes incentivized to go easy on the auditing side — by reducing testing, lowering standards or putting more junior staff members on complex audits, for example — to secure their more lucrative consulting business. This conflict of interest, combined with auditing methods of the time that weren't strong enough to uncover elaborate, high-level fraud schemes, created an environment that allowed enormous deceptions to go unnoticed. At their peak, Enron and WorldCom employed more than 100,000 people combined and operated in over 40 countries. Enron pioneered the trading of energy derivatives, reinvented the natural gas industry and earned Fortune magazine's title of America's Most Innovative Company for six consecutive years. WorldCom was the dominant player in internet infrastructure and a telecom leader that reshaped the industry, once boasting the largest acquisition in corporate history and the fifth most widely held stock. Both had powerful chief executives and celebrated chief financial officers who were beloved by Wall Street. The cost of their deceit was staggering. More than 50,000 employees lost their jobs and the companies entered bankruptcy, leaving investors and creditors with catastrophic losses. At the time, these were the largest bankruptcies and civil settlements in corporate history. In response to these and other failures, Congress came together in 2002 to pass the Sarbanes-Oxley Act, which created a strong framework to deter and detect fraud. The P.C.A.O.B. was a cornerstone of that reform: an independent, nonprofit, nongovernmental regulator charged with overseeing public company audits and restoring trust in financial reporting. The bill enjoyed overwhelming bipartisan support and passed almost unanimously in the House (423-3) and in the Senate (99-0). The accounting oversight board ushered in rigorous inspections, enhanced enforcement and an improvement in audit quality that the profession badly needed. Successive Securities and Exchange Commission chairs from both parties have affirmed the board's value as a vital post-crisis innovation: Thanks to its work, audits today are more consistent, more credible and more accountable, helping to uncover deficiencies that might otherwise fester. The board's continued vigilance is crucial, as many of the systemic risks that necessitated its creation — such as the inherently conflicted relationship between auditors and their clients and the temptation of fraud — still endure. Every organization has room to improve, but any needed changes can be addressed within the current framework. Instead, as part of its broader federal budget reconciliation bill, the House has advanced a measure to eliminate the board and shift its responsibilities to the S.E.C. That might sound like a bureaucratic tweak. It isn't. Independence from the S.E.C. is one of the board's greatest strengths. The S.E.C. does oversee it, approving its budget and appointing members, but the two work separately and in complementary ways to protect investors. While the S.E.C. has a sprawling agenda — regulating public companies that sell investments such as stocks or bonds — the board has one mission: ensuring high-quality audits. That laser focus is critical, and it's only possible because of the board's operational independence. One of the most concerning risks is losing audit oversight for overseas companies listed on U.S. exchanges. Under formal cooperative agreements with many foreign regulators, the P.C.A.O.B. has conducted inspections in over 50 international jurisdictions — including China, where in 2022 it secured unprecedented access. That may not survive a transfer to the S.E.C., a government agency, because Chinese regulators have historically rejected direct involvement from other governments. Without a nongovernmental alternative like the P.C.A.O.B., oversight would likely have to be renegotiated from scratch and might be lost entirely. The upshot would be a higher risk of frauds like that of Luckin Coffee, a Chinese company that fabricated approximately $310 million in sales and cost investors billions after listing on a U.S. exchange in 2019. Systemic risks metastasize in regulatory gaps. The United States learned this after the free-market fever of the late 1990s and early 2000s, when Congress deregulated the telecom, energy and financial sectors, including by repealing the Glass-Steagall Act and exempting derivatives from oversight. The rollback of these essential guardrails contributed to the downfall of WorldCom and Enron, as well as the 2008 financial crisis. Since then, technological risks and the complexity of financial markets and reporting have only grown. Yet Congress is now considering barring states from regulating artificial intelligence for 10 years despite knowing very little about how A.I. tools might be used. It is highly likely that A.I. will dominate audit procedures and public company financial statement preparation in the near future. Accounting oversight has never been more needed. The proposed bureaucratic consolidation purports to save taxpayer dollars. That is merely wishful thinking or creative accounting. The P.C.A.O.B. is funded by fees from public companies and registered brokers and dealers, not taxes; transferring its duties to the S.E.C. would only shift its costs to the public. And taking on yet another job couldn't come at a worse time for the S.E.C., which reportedly has lost 16 percent of its staff in the past year, mostly because of Department of Government Efficiency-related buyouts. To continue the board's work, the S.E.C. would effectively need to rebuild it, but it does not have the resources to do so. Representative Michael Oxley once said, 'We often think of money as the currency of a free market system, but in truth the system rises and falls on the confidence of its investors.' Trust is hard won and easily lost. The P.C.A.O.B. was built to protect it. But if it's allowed to erode, we will all pay the price from market volatility, higher borrowing costs and potentially taxpayer-funded cleanup efforts. The silent, immeasurable value of well-designed safeguards lies in the scandals they prevent from happening.
