Appendix

Excerpts from the Wall Street Journal’s “Year-End Review of Markets & Finance,” 2001–2004

The following bibliographic guide is drawn from Wall Street Journal “Year-End Review” features that include articles over the period 2001 to 2004 and the Wall Street Journal abstracts, lightly edited here, to the article content. References to events that impacted Freddie Mac or Citigroup are italicized for emphasis to help the reader better appreciate the atmosphere around the author at the time. This appendix is intended to give the reader an overview of coverage during this period. Full bibliographic references and texts of the articles are available at wsj.com.

February 2001

9 Lucent is under investigation by the SEC over possible fraudulent accounting practices. The inquiry focuses on how Lucent booked $679 million in revenue during fiscal 2000.

March 2001

1 Cendant’s former chairman and vice chairman are indicted on criminal charges that they directed an accounting fraud that inflated earnings by several hundred million dollars.

May 2001

3 A grand jury indicts the former chairmen of Sotheby’s and Christie’s on charges that they masterminded a scheme to fix clients’ commissions. Alfred Taubman and Sir Anthony Tennant are accused of colluding on how the auction houses dealt with art sellers from 1993 through 1999, including agreeing to raise commission rates.

June 2001

20 The SEC fines Arthur Andersen and three partners more than $7 million in connection with audits of Waste Management’s annual financial results. Arthur Andersen agrees to pay the fine in order to settle the case, one of the first fraud cases ever filed against a Big Five accounting firm.

October 2001

17 Enron takes a $1.01 billion charge, mostly connected with write-downs of soured investments, producing a $618 million third-quarter loss. One portion of the charge, connected with a pair of limited partnerships that were run by Enron’s finance chief, is raising conflict of interest questions.

November 2001

1 Enron discloses that the SEC has elevated to a formal investigation an inquiry into the energy-trading concern’s financial dealings with partnerships led by its former finance chief.
5 An Enron deal raises fresh questions about its financial interactions with management. The energy-trading giant’s $35 million purchase from an entity run by a company officer appears to be one of a complex series of transactions that let Enron keep millions in debt off its balance sheet for the past three years.
8 Waste Management agrees to pay $457 million to settle a class-action suit alleging securities law violations.
9 Enron discloses in an SEC filing that it reduced its previously reported net, dating back to 1997, by $586 million, or 20 percent, mostly as a result of improperly accounting for its dealings with partnerships run by some company officers.

29 Enron’s debt is downgraded to junk status by credit-rating agencies, and Dynegy calls off its planned merger following the announcements. Enron’s stock price plunges 85 percent. A day later, Enron’s European energy-trading unit files for protection from creditors.

December 2001

6 Alfred Taubman, former chairman of Sotheby’s, is found guilty of conspiring with the ex-chairman of rival Christie’s to fix fees charged art clients.

January 2002

10 The Justice Department confirms it will pursue a criminal probe of Enron, focusing on possible accounting fraud.
11 Arthur Andersen says its employees destroyed many documents related to its work for Enron.
16 Arthur Andersen fires the partner who directed the destruction of thousands of emails and documents related to the Enron audit.
17 Enron’s board fires Arthur Andersen as auditor amid a storm of recriminations between the companies.
22 Three former Enron employees say documents were shredded in the accounting department of the company’s Houston headquarters after federal investigators began an inquiry into possible illegalities at the energy concern.
24 Enron CEO Kenneth Lay resigns less than twenty-four hours after a bankruptcy court–appointed creditors committee seeks his removal.
25 Former Enron vice chairman J. Clifford Baxter, who quit the energy firm in May, is found dead, an apparent suicide.
29 Global Crossing files for Chapter 11 in the biggest telecom collapse so far.

February 2002

4 An internal Enron report finds various improper financial transactions and massive self-dealing by company officials.
5 Kenneth Lay says he is quitting Enron’s board, and lawmakers announce they will subpoena him to appear before investigative panels.
8 In testimony before Congress, Enron’s former CEO denies knowledge of improper activities by his subordinates and many of the details of the partnerships that brought the company down.
8 WorldCom’s CEO says the company stepped in to cover a personal loan of $198.7 million. The long-distance firm cut its 2002 forecasts and said it expects a charge of $15 billion to $20 billion.

13 Enron’s former chairman invokes the Fifth Amendment, declining to answer any questions from a Senate panel. Separately, remarks by Kenneth Lay to an investigative committee in January indicate that on at least two occasions he may have deliberately misled the public in order to keep the firm’s problems from becoming known. Enron announces the planned resignations of six board members, including four who served on its audit panel.
20 CSFB (Credit Suisse First Boston) fines two executives and a top broker $500,000 apiece in the aftermath of a regulatory probe of alleged abuses in the way the firm handed out hot initial public offerings.

March 2002

4 Arthur Andersen agrees to pay $217 million to settle all pending litigation related to its audits of the Baptist Foundation of Arizona, which filed for Chapter 11 after its collapse in 1999.

12 Qwest and WorldCom say the SEC has launched inquiries into their accounting practices.
15 Andersen is charged by the Justice Department with obstruction of justice over the destruction of documents related to its Enron audit. Anderson loses some forty clients in the wake of the Enron collapse, including Merck, Freddie Mac, and Delta Air Lines.

April 2002

3 The SEC is looking into accounting methods at some of the largest U.S. companies, broadening the scope of its inquiry beyond the issues in the Enron probe.
8 An amended Enron lawsuit alleges that more than three dozen new defendants, including Merrill Lynch and J. P. Morgan Chase, participated in a scheme with the company’s top executives to defraud investors.
9 The Andersen partner fired by the firm for shredding Enron audit documents has agreed to plead guilty to obstruction and cooperate with U.S. prosecutors.

10 The SEC widens its probe of alleged accounting fraud at Xerox, telling two former executives and KPMG, the firm’s former auditor, that it may file civil charges against them.
23 Alfred Taubman of Sotheby’s is sentenced to a year and a day in jail and fined $7.5 million for his role in a price-fixing scheme.
30 WorldCom’s CEO Bernard Ebbers quits. He reaches his decision under pressure from outside directors frustrated by the company’s sinking stock price, controversy over Ebbers’s $366 million personal loan from the firm, and the SEC’s investigation of the company.
30 Sotheby’s ex-CEO Diana Brooks is sentenced to three years’ probation instead of prison for her role in a price-fixing scheme.

May 2002

7 Enron energy traders manipulated California’s power system to bolster profits during the height of the state’s 2000–2001 energy crisis, documents released by federal regulators show. California officials call for a new criminal inquiry.

14 Reliant says it engaged in bogus power trades during the past three years to make its business appear larger. The company blames rogue traders.
16 CMS Energy says $4.4 billion of its electricity trading—most of its volume for 2000 and 2001—resulted from sham “round-trip” swaps with Dynegy and Reliant that had no economic value. Meanwhile, the SEC is conducting a sweeping probe across many industries into practices that pump up revenue.
16 Adelphia says its founder, John Rigas, has resigned and that it has launched a probe amid new allegations involving the Rigas family.
17 Adelphia is the subject of a probe by federal prosecutors into possible accounting irregularities.
17 Reliant and CMS announce management shake-ups, following admissions that managers had engaged in bogus power deals.
20 Federal authorities are trying to determine whether Computer Associates wrongly booked more than $500 million in revenue in its 1998 and 1999 fiscal years in a scheme to enrich the firm’s senior managers.
22 Merrill Lynch agrees to pay $100 million and change how it monitors its stock analysts in settling the New York State attorney general’s inquiry into allegations that it misled individual investors about the stock of its investment banking clients.
28 CMS’s chief resigns following disclosures that the energy firm’s trading unit had conducted transactions that artificially boosted volumes and revenue.
29 Dynegy’s chief Chuck Watson resigns under pressure from the company’s board. Watson’s departure comes amid mounting questions about some of the energy concern’s financial practices.
29 Halliburton says the SEC has launched a preliminary inquiry into its accounting treatment of cost overruns on construction jobs.
31 Citigroup analyst Jack Grubman was instrumental in making management and business decisions at Global Crossing for two years after the firm went public in August 1998. The activities of the Salomon telecom analyst may lend support to New York State attorney general Eliot Spitzer’s probe into conflicts of interest among research analysts.

June 2002

6 New York prosecutors are looking into whether former Tyco CEO Dennis Kozlowski improperly used company funds to buy his $18 million New York apartment and whether he received interest-free loans from the company to purchase artwork.
7 Adelphia inflated the number of cable TV subscribers by 400,000 to 500,000 and kept two sets of books to inflate the amount it spent to upgrade systems.

10 Adelphia’s board dismisses auditor Deloitte & Touche, accusing it of not informing the cable company about questionable accounting and self-dealing.
13 ImClone’s former CEO is arrested on charges of trying to sell ImClone stock and tipping off family members after learning that regulators would soon reject his company’s cancer drug.
13 The SEC reopens a probe of Tyco as part of a broader review of possibly questionable corporate accounting in the aftermath of the Enron meltdown. Separately, Tyco receives SEC clearance for a CIT share offer but is forced to take a $4.5 billion charge to reflect the unit’s impaired value.
17 Andersen is convicted of one felony count of obstructing the SEC’s investigation into Enron’s collapse. The verdict, which the accounting firm plans to appeal, gives the Justice Department a badly needed boost in momentum as it pursues indictments for more serious crimes at the energy trader.
18 Enron discloses it made $745 million of payments and stock awards to executives in the year prior to its bankruptcy law filing.
24 Three former top Rite Aid executives are charged with masterminding an illegal accounting scheme that triggered the largest corporate earnings restatement in U.S. history.
26 WorldCom’s audit panel uncovers what could be one of the largest accounting frauds ever, with the discovery of $3.8 billion in expenses improperly booked as capital expenditures. Without the transfers, WorldCom would have reported a loss for 2001 and the first quarter of 2002. The company fires its longtime chief financial officer Scott Sullivan.
26 Adelphia files for bankruptcy court protection amid probes into some of the largest self-dealing in U.S. corporate history.
27 The SEC files a civil suit alleging WorldCom engaged in a fraudulent scheme to pad earnings.
27 Former Tyco chief Dennis Kozlowski is charged with two new felony counts of tampering with evidence in connection with an alleged tax evasion scheme.
28 A new Xerox audit finds that the company improperly accelerated far more revenue during the past five years than the SEC estimated in an April settlement. The total amount of improperly recorded revenue from 1997 through 2001 could be more than $6 billion.

July 2002

1 Xerox overstated its pretax income by 36 percent, or $1.41 billion, in the past five years, showing bookkeeping misdeeds more severe than the SEC estimated.
5 The Justice Department begins a criminal probe into Qwest, the latest blow for a telecom firm struggling with $26.6 billion in debt and steep declines in local and long-distance businesses.

12 Bristol-Myers confirms the SEC is probing whether the drug maker improperly inflated revenue last year by up to $1 billion.
22 WorldCom files for Chapter 11 in the largest bankruptcy case in U.S. history.
25 Adelphia founder John Rigas and two of his sons are arrested and charged with looting the cable television company.
29 Qwest says it expects to restate financial results for 2000 and 2001 and to withdraw previously reduced financial projections for 2002.
31 President Bush signs a bill to fight corporate fraud. At an elaborate ceremony to give his approval to legislation he initially resisted, the president promises “no more easy money for corporate criminals, just hard time.”

August 2002

8 ImClone’s Samuel Waksal is indicted for insider trading; he pleads not guilty. ImClone soon files suit against its founder and former CEO, alleging he deliberately impeded continuing probes of the biotech firm.
9 WorldCom expects to expand its planned financial restatement to $7.2 billion from $3.85 billion as a result of additional accounting irregularities.

16 Citigroup analyst Jack Grubman resigns from Salomon Smith Barney. The telecommunications analyst had faced mounting pressure from regulators, who say he hyped stocks to help the firm win investment banking deals. The move comes as Salomon faces an NASD (National Association of Securities Dealers) inquiry into whether it directed shares of hot initial public offerings into clients’ personal brokerage accounts at below-market prices. Salomon later acknowledges that it directed thousands of shares of hot IPOs to executives of WorldCom. Nearly 1 million shares of those IPOs went to Bernard Ebbers, WorldCom’s ex-CEO, documents show.
22 Former Enron executive Michael Kopper names Andrew Fastow, Enron’s ousted chief financial officer, as an unindicted co-conspirator as he pleads guilty to money laundering and fraud. A onetime aide to Fastow, Kopper was a key player in several off–balance sheet partnerships. His plea agreement is the first by a former Enron executive.
23 Salomon Smith Barney is being investigated by New York’s attorney general over how the securities firm won a lucrative deal from AT&T and what role Citigroup CEO Sanford Weill may have played. Salomon was picked as lead underwriter for the April 2000 stock offering only after telecom analyst Jack Grubman upgraded his rating of AT&T to a “buy.”
29 Prosecutors win an indictment against Scott Sullivan, WorldCom’s former top finance executive, accusing him of orchestrating the telecom firm’s $7.2 billion fraud. The federal grand jury also indicts Buford “Buddy” Yates, a midlevel accounting official. The two are charged with securities fraud and making false filings to the SEC.

September 2002

5 Credit Suisse First Boston’s Frank Quattrone pushed for greater IPO allocations for investment banking clients, according to email records and people familiar with the firm. The allegations against the star technology industry investment banker thrust Credit Suisse Group’s CSFB into the spotlight of regulatory scrutiny regarding IPO allocation practices. It soon emerges that CSFB analysts felt pressured by the firm to avoid writing negative reports on investment banking clients, according to evidence in a Massachusetts probe.
9 Citigroup ousts Michael Carpenter as head of its global corporate and investment bank amid allegations of questionable practices at its Salomon unit.

13 Tyco’s former CEO and ex–finance chief are charged with stealing over $170 million. Prosecutors accuse Dennis Kozlowski and Mark Swartz of running a “criminal enterprise” aimed at defrauding investors, saying the executives siphoned off company funds for their own use. Mark Belnick, the former general counsel, is charged with falsifying business records.
16 Prosecutors are investigating alleged fraud by Enron in the manipulation of power prices in three western states during the California electricity crisis. They are examining whether two former top executives, Jeffrey Skilling and Greg Whalley, were aware of the questionable trading practices or sought to conceal them.
19 WorldCom prepares a further revision of its financial results that could add about $2 billion to the $7 billion in accounting problems it has already disclosed. The move marks the second time the long-distance firm has added large amounts to its earnings revision.
19 Merrill fires Thomas Davis, one of two vice chairmen, for his refusal to testify in an investigation of several Enron deals.
20 Citigroup agrees to pay $215 million to settle FTC allegations that Associates First Capital engaged in deceptive and abusive lending.
24 Xerox is facing a criminal inquiry by federal authorities related to the copier company’s massive misstatement of earnings. FBI agents and prosecutors recently questioned James Bingham, a former assistant treasurer, who said he was fired for trying to rein in unethical accounting.
24 Salomon agrees to settle civil charges levied by the NASD that analysts touted Winstar while privately questioning the stock. Winstar, a telecom company, filed for bankruptcy court protection in 2001.
24 Adelphia founder John Rigas, two of his sons, and two other former executives are indicted on charges of looting the firm.
26 Merrill employee Douglas Faneuil agrees to plead guilty to a misdemeanor charge and provide testimony against Martha Stewart and others over their sales of ImClone stock in 2001.
27 WorldCom’s ex-controller David Myers pleads guilty to fraud, claiming he manipulated accounts at the behest of management.
30 New York prosecutors are examining whether Tyco’s outside auditor Price-waterhouseCoopers knew about secret bonuses paid to former Tyco executives and accounting that regulators say hid the payments.
30 Citigroup offers to create a separate research arm as part of a global settlement with regulators probing allegations of stock hyping at its Salomon unit.

October 2002

1 New York attorney general Eliot Spitzer sues five telecom executives, demanding that they return to investors the $1.5 billion that the suit says was obtained from the sale of stock in their own firms and $28 million in profits from the sale of Salomon IPOs.

11 Two former WorldCom employees plead guilty for their role in the $7.2 billion accounting fraud.
16 ImClone’s Samuel Waksal pleads guilty to insider trading and other charges.
18 The former head of Enron’s western energy-trading desk admits he conspired to manipulate California’s electricity market to maximize profits.
24 AOL Time Warner says it will restate financial results for the past two years because of more questionable advertising transactions at America Online. The restatement will reduce revenue by $190 million and is likely to deepen uncertainty about accounting issues.
25 Eliot Spitzer and the SEC unveil a plan for a panel to oversee independent stock research that brokerage firms would be required to provide to individuals.
25 Bristol-Myers says it will restate sales and earnings for at least the past two years because of a wholesale inventory-stocking issue.
30 Citigroup plans to break out its research and retail brokerage operations into a new unit, amid pressure on the firm from regulators to tackle stock analyst conflicts.

November 2002

1 Former Enron official Andrew Fastow is indicted for fraud, conspiracy, money laundering, and coercing his lieutenant to destroy documents.
6 WorldCom discloses that its false profits could top $9 billion. The SEC slapped the firm with more fraud charges and said the deception goes back to 1999.

13 Jack Grubman indicates Citigroup CEO Sanford Weill pushed him to upgrade AT&T’s stock rating as part of Weill’s power struggle with Citigroup’s former co-chairman John Reed.

December 2002

23 A stock research settlement unveiled by regulators requires ten firms, including Citigroup, to pay $1.4 billion, including $900 million in penalties, $450 million for independent research over the next five years, and $85 million for investor education.

January 2003

3 J. P. Morgan says it will take a $1.3 billion charge for the fourth quarter, largely to settle litigation over its involvement with Enron.

23 Freddie Mac will restate its earnings higher for at least the past two years after its auditor recommends accounting changes.

February 2003

5 Sprint forced out its two top executives last month as part of a dispute over their use of a questionable tax shelter.
7 The SEC will require Wall Street analysts to certify that they believe what they put in research reports and public statements.

25 Ahold ousts its CEO and chief financial officers and says it will have to lower its earnings for the past two years by at least $500 million. Federal regulators later open inquiries into accounting at the Dutch supermarket owner’s U.S. Foodservice unit.

March 2003

4 ImClone founder Samuel Waksal pleads guilty to criminal charges related to evading $1.2 million in sales taxes on art purchases.
5 Frank Quattrone is forced to resign from CSFB after he fails to provide testimony to regulators investigating his activities.
7 The NASD charges Quattrone with several civil violations, describing conduct that benefited wealthy individuals at the expense of small investors. Quattrone denies wrongdoing.

11 Bristol-Myers concedes that its accounting has been “inappropriate” and that sales from 1999 to 2002 were inflated by up to $2.75 billion.
20 The SEC accuses HealthSouth and CEO Richard Scrushy of accounting fraud, alleging that they overstated earnings by $1.4 billion since 1999 in order to meet Wall Street estimates. According to the complaint, Scrushy personally profited from the scheme. Weston Smith, the former finance chief, pleads guilty to four criminal charges.
24 Citigroup CEO Sanford Weill withdraws his nomination as a director to represent public investors on the board of the New York Stock Exchange.
24 The NYSE is under fire for its corporate governance in the wake of its nomination of Citigroup’s Sanford Weill to be a director. A few days earlier, Weill withdrew his nomination.
27 HealthSouth’s finance chief pleads guilty to falsely certifying financial statements.
28 Lucent agrees to a $568 million settlement to resolve shareholder suits that alleged the telecom firm engaged in financial fraud and aggressive sales practices.

April 2003

1 HealthSouth dismisses CEO Richard Scrushy and moves to replace its outside auditor, Ernst & Young.

24 Frank Quattrone is arrested and charged by prosecutors with obstructing justice and witness tampering in connection with the probe of IPO practices at CSFB. He denies wrongdoing.
28 Former Merrill analyst Henry Blodget pays $4 million and is barred from the securities industry for life as part of a settlement over his research calls.
29 Ten securities firms including Citigroup agree to pay a record $1.4 billion to settle government charges that they issued overly optimistic stock research to win investment banking business. The pact also settles charges that at least two firms improperly doled out IPOs to executives.
30 Tyco finds roughly $1.2 billion in fresh accounting problems. The new problems come on top of $265 million to $325 million in charges announced in March.

May 2003

2 Prosecutors file new charges against Enron’s former finance chief Andrew Fastow and indict his wife and seven other ex-officials for fraud and other violations. Fastow denies the allegations that he helped engineer a massive financial fraud and stole millions from his employer.
8 Securities regulators missed “systemic” problems on Wall Street, lawmakers charge at a Senate Banking Committee hearing into the $1.4 billion stock research settlement. Senators also allege the agreement doesn’t go far enough to punish wrong-doers and prevent future abuses. Regulators look into the actions of investment bankers in their stock research probe, focusing on Salomon.
9 The SEC is in talks with Qwest to settle potential fraud charges stemming from the phone company’s swaps of fiber optic capacity with other telecom firms. Qwest says the deals had a business purpose, a claim the SEC contests.

13 Frank Quattrone is indicted on criminal obstruction of justice and witness-tampering charges. Later this month, he pleads not guilty to the charges.
14 Ahold ousts the chief executive of U.S. Foodservice, the unit whose accounting problems have forced the retailer to restate earnings. Later in the week, two executives resign in the wake of the scandal involving supplier rebates that were inflated to boost earnings.
20 MCI agrees to pay investors $500 million to settle fraud charges that the company, formerly WorldCom, misled investors in the biggest accounting scandal in U.S. history.

June 2003

5 Martha Stewart is indicted on criminal charges of securities fraud, conspiracy, and making false statements to federal agents. In a separate civil case, the SEC accuses her of insider trading related to her ImClone share sale. Stewart relinquishes her posts as chairman and CEO of Martha Stewart Living.
6 The SEC forces six former and current Xerox executives, including two ex-CEOs and a former finance chief, to pay $22 million in fines and other penalties to settle civil fraud charges related to overstated revenues and profits. The agency says the executives profited from bonuses and stock sales based on false financial results.
6 A report on accounting fraud at WorldCom concludes for the first time that former CEO Bernard Ebbers played a role in efforts to improperly boost revenue. A week later, two external probes find that Ebbers conspired with top officials and employees beginning in the late 1990s to carry out a massive fraud.

10 Freddie Mac fires its president and asks its chairman and CEO and its finance chief to resign. The firm reiterates plans to restate three years of earnings. The moves send Freddie’s stock down 16 percent.
11 Samuel Waksal is sentenced to seven years and three months in prison for insider trading, obstructing justice, and tax evasion.
12 Freddie Mac’s ex-CEO will receive a $24 million severance package, despite being asked to resign in the wake of accounting problems. In addition, both Leland Brendsel and David Glenn, the former chief operating officer, will be able to exercise stock options valued at $14.2 million for Brendsel and $5.3 million for Glenn. The U.S. attorney and the SEC have opened probes of the firm.
18 Rite Aid’s ex-CEO pleads guilty to two conspiracy counts in a massive accounting fraud. Under the plea deal, Martin Grass agrees to pay $3.5 million in fines and forfeiture.
26 Freddie Mac says it understated past earnings by as much as $4.5 billion after taxes, blaming lax accounting controls.

July 2003

29 Citigroup and J. P. Morgan Chase agree to pay a total of $305 million to settle actions related to loans and trades made with Enron and Dynegy, ending nineteen months of intense regulatory scrutiny. They also agree to overhaul the way they vet their most complex financial deals. Regulators say the settlement involves $8.3 billion in loans improperly accounted for by Enron.

August 2003

22 The NYSE fines Salomon Smith Barney for failing to supervise brokers dealing with WorldCom employees.
25 Freddie Mac bowed to pressure from its federal regulator Friday and agreed to remove chief executive Greg Parseghian, a former head of Freddie Mac’s $600 billion loan portfolio who was tapped to be CEO just two months ago in a management shake-up.

September 2003

4 At a hearing, WorldCom ex-CEO Ebbers pleads not guilty to fifteen felony charges of violating Oklahoma securities law.

11 Enron’s former treasurer pleads guilty to one count of conspiring to commit fraud and is sentenced to five years in prison.
17 New York’s attorney general files criminal charges against Theodore Siphol, a former Bank of America broker, over allegedly improper fund trading. Siphol has denied committing any illegality.
18 Merrill accepts responsibility for the role of some employees in the Enron scandal as part of a deal to avoid prosecution. The brokerage firm agrees to a wide-ranging set of changes and restrictions in exchange for not being prosecuted by the Justice Department. Three ex-officials are criminally charged.

October 2003

6 Merrill Lynch fires three brokers who allegedly helped hedge fund Millennium improperly trade more than five mutual funds.

17 A former executive at Alger pleads guilty to New York State criminal charges of obstructing a probe of improper mutual fund trading. The SEC also brings civil charges against the executive, James Connelly, saying he let select customers rapidly trade some funds.
27 The case against Frank Quattrone ends in a mistrial, an outcome that could give prosecutors pause about how they try future financial cases.
29 Massachusetts regulators and the SEC charge Putnam and two fund managers with securities fraud over market timing.

November 2003

3 Richard Strong steps down as chairman of Strong Mutual Funds in the wake of allegations he engaged in improper trading.
4 Putnam’s CEO is ousted in the wake of civil charges against the firm. The SEC said it found widespread fund industry abuses.
5 Richard Scrushy is indicted on eighty-five counts related to the HealthSouth accounting scandal, including fraud, money laundering, and violations of the Sarbanes-Oxley corporate crime law. The indictment says the former chairman pursued plans to keep the $2.7 billion fraud from being revealed as pressure from a federal probe mounted.
5 Prosecutors announce plans to retry Frank Quattrone on obstruction charges, but lawyers agree to a delay in setting a retrial.

14 Investment firm Pilgrim Baxter’s two founders quit after it was disclosed that they were connected to market timing trades.
24 Freddie Mac releases a restatement showing it understated earnings by almost $5 billion and revealing new accounting troubles.

December 2003

2 Boeing’s Philip Condit resigns as chairman and chief executive in the wake of scandals that tainted the aerospace giant’s relationship with the government.
3 Richard Strong quits as chairman and CEO of Strong Financial amid allegations that he engaged in short-term trading at the mutual fund company he founded.
3 Securities regulators file civil fraud charges against Invesco and its CEO, alleging they allowed market timing by some investors in at least ten funds.

12 Regulators bring civil charges against the former Prudential Securities for an alleged late-trading scheme and accuse Heartland executives of insider trading.
16 Alliance agrees to reduce its mutual fund management fees by 20 percent for the next five years as part of an agreement with Eliot Spitzer to settle allegations that it allowed improper fund trading. The reduction would come on top of a record $250 million fine Alliance is expected to pay to settle civil fraud charges it could be facing.
17 Putnam says that an additional nine employees engaged in short-term market-timing trades of its mutual funds are being fired. The Marsh & McLennan unit previously disclosed that six of its fund managers had engaged in timing trades.
22 Parmalat plans to seek bankruptcy court protection in Italy after disclosing that an account it reported at Bank of America allegedly holding billions of dollars doesn’t exist. Prosecutors later find more money missing, widening the scope of the alleged fraud to over $8 billion.

January 2004

14 Former Enron finance chief Andrew Fastow and his wife agree to plead guilty to criminal charges for their roles in the energy concern’s collapse. Fastow later agrees to serve ten years in return for his cooperation.
27 Parmalat hid nearly $16 billion of debt and reported earnings more than five times their actual size, an initial report finds.

February 2004

18 Five NYSE specialists tentatively agree to pay about $240 million to settle civil charges that they stepped ahead of customer orders.
20 Jeffrey Skilling is indicted on an array of charges stemming from an alleged plan to manipulate Enron’s financial statements. The indictment of the fallen energy company’s former president and CEO leaves former chairman Kenneth Lay as the highest-ranking Enron figure who hasn’t been charged with criminal wrongdoing.

March 2004

3 Bernard Ebbers, the former chairman and CEO of WorldCom, is indicted for allegedly helping to orchestrate the largest accounting fraud in U.S. history. After a two-year probe, prosecutors got their break as Scott Sullivan, World-Com’s former finance chief, pleaded guilty to three charges and agreed to cooperate in the case.
8 Martha Stewart is convicted of obstruction charges related to the sale of ImClone stock and vows to appeal.

16 Bank of America and Fleet Boston agree to $675 million in fines and fee cuts to settle civil fraud charges in the mutual fund scandal. The penalties bring to more than $1.65 billion the total to be paid by fund industry participants to settle allegations of improper trading.
26 Former Dynegy executive Jamie Olis is sentenced to more than twenty-four years in prison in an accounting fraud case that fell under tough federal rules.

April 2004

5 The case of former Tyco chief executive Dennis Kozlowski and former chief financial officer Mark Swartz ends in mistrial.
8 Computer Associates’ ex–finance chief Ira Zar and two other former finance officials agree to plead guilty to at least two criminal charges, including securities fraud and obstruction, in the federal probe of the software maker’s accounting.

22 Computer Associates’ Sanjay Kumar steps down as chairman and chief executive amid fears that he might be charged in the company’s accounting probe. The company soon restates more than $2 billion in revenue.
29 Nortel Networks fires chief executive Frank Dunn and other senior officials, as the firm’s accounting problems spread to its top ranks. The telecommunications equipment maker also warns of a sharp downward revision of 2003 results.

May 2004

4 Frank Quattrone, the ex-head of technology investment banking at Credit Suisse First Boston, is found guilty after a retrial on charges he interfered with a U.S. investigation at the investment bank in 2000.
7 The wife of Enron ex–finance chief Fastow is sentenced to a year in prison after pleading guilty to a tax charge arising from the Enron scandal.

11 Citigroup agrees to pay $2.65 billion to settle a lawsuit brought by investors of the former WorldCom who lost billions of dollars when the telecommunications operator filed for Chapter 11. The suit alleges Citigroup and other investment banks that underwrote WorldCom bonds didn’t conduct adequate due diligence.
21 Richard Strong and his Strong Funds agree to a $175 million settlement of allegations that he took part in and allowed rapid trading.
25 Eliot Spitzer sues former NYSE chairman Dick Grasso and compensation committee ex-chairman Kenneth Langone, seeking to recover more than $100 million of Grasso’s $200 million compensation package. The civil suit alleges that the two men misled directors about the size of the package and that Grasso intimidated them into approving the payouts.
25 Bernard Ebbers is charged with six new counts accusing the former World-Com CEO of making false filings to the SEC.
28 Former Rite Aid CEO Martin Grass is sentenced to eight years in prison for his role in accounting fraud at the drugstore chain.

June 2004

22 Goldman and Morgan Stanley tentatively agree to pay a total of $80 million to settle accusations over their handling of IPOs.
24 The SEC approves a rule requiring fund firms to have independent chairmen, a move that will displace most funds’ heads.
30 Bank One agrees to a $90 million settlement with the SEC and New York attorney general Spitzer over charges the firm’s mutual fund group entered deals to allow short-term trading.

July 2004

8 Kenneth Lay is indicted for his role in Enron’s collapse. The energy giant’s former CEO, charged with being part of a wide-ranging scheme to defraud investors, denies any wrongdoing.
9 Prosecutors win criminal convictions against Adelphia founder John Rigas and his son Timothy, former CFO, but fail to convince a jury the looting at the cable company involved the firm’s former assistant treasurer.
9 MCI sues former CEO Bernard Ebbers in a bid to collect more than $300 million that he owes on $408 million of loans from the company.

28 The government brings civil and criminal charges against four former executives of the U.S. Foodservice unit of Ahold NV, alleging they inflated earnings to reap big bonuses.

August 2004

5 Bristol-Myers agrees to pay $150 million to settle SEC charges of accounting fraud involving $1.5 billion of inflated revenue.

19 The SEC staff warns Freddie Mac that the company is likely to face civil charges involving alleged securities law violations.
20 Nortel fires seven finance officials as it strives to clean up accounting problems.

September 2004

1 A probe of Hollinger International finds former CEO Conrad Black and ex-president David Radler siphoned off more than $400 million through “aggressive looting” of the publishing company, in what amounted to a “corporate kleptocracy.” The two executives quit in 2003 when the company alleged that they and other officials had received $32 million of unauthorized payments.
9 Frank Quattrone is sentenced to eighteen months in prison for obstructing a government probe into how CSFB allocated IPO shares.

13 Qwest Communications International agrees to a preliminary $250 million settlement with the SEC over improper accounting, while ex–chief executive Joseph Nacchio soon may face civil charges.
21 The regulator of Fannie Mae (the Federal National Mortgage Association) outlines the results of its accounting probe, finding a pattern of decisions aimed at manipulating profit.
23 Sanjay Kumar is indicted for allegedly helping to orchestrate a widespread accounting fraud at Computer Associates and then lying to investigators. The software maker’s ex-CEO, along with its former sales head, faces charges including securities fraud and obstruction.
23 Fannie Mae’s regulator accuses the mortgage finance giant of a wide range of improper accounting practices in a report that follows an eight-month probe.

October 2004

15 Marsh & McLennan is accused of cheating corporate clients by rigging bids and collecting fees from insurers for throwing business their way. The allegations are contained in a civil suit filed against the insurance broker by New York State attorney general Spitzer. The suit also names insurers American International Group, Ace, Hartford Financial, and Munich-American Risk Partners as participants.
22 The SEC alleges that Qwest Communications engaged in pervasive fraud by top management. The telecommunications company agrees to pay a $250 million penalty.
26 Jeffrey Greenberg quits as Marsh & McLennan’s chairman and chief executive officer under pressure from prosecutors in the bid-rigging case.

November 2004

4 A jury finds four former Merrill bankers and an Enron ex-executive guilty of conspiracy and fraud in connection with a scheme to inflate the energy firm’s 1999 earnings. The verdicts in the first Enron criminal trial involve the purported sale by Enron to Merrill of an interest in barges off the coast of Nigeria.

16 Fannie Mae estimates it will have to post a $9 billion loss if the SEC finds it has been accounting improperly for derivatives. Regulator OFHEO says Fannie incorrectly applied accounting rules in a way that let the mortgage company spread out losses over many years rather than taking an immediate hit.

December 2004

22 Fannie Mae’s CEO Franklin Raines and chief financial officer Timothy Howard step down amid growing pressure from regulators over accounting violations. The mortgage company’s board also dismisses KPMG as outside auditor.