Krispy Kreme, the corporate crime lottery, and Sarbanes-Oxley<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.lvcriminaldefense.com\/krispy-kreme-corporate-crime-lottery-sarbanes-oxley\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Krispy Kreme, the corporate crime lottery, and Sarbanes-Oxley\" \/>\n<meta property=\"og:description\" content=\"Today\u2019s W$J covers the problems at Krispy Kreme.\u00a0 There is what looks like possible accounting fraud \u2013 shading earnings to show continued growth.\u00a0 Small adjustments can be very significant, given irrational market reaction to earnings \u201cthresholds.\u201d Indeed, this is the sort of thing that just got Scott Sullivan five years at MCI. 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aDriv4 Shell{"id":8645,"date":"2006-11-22T10:41:12","date_gmt":"2006-11-22T10:41:12","guid":{"rendered":"https:\/\/www.lvcriminaldefense.com\/?p=8645"},"modified":"2020-10-02T09:44:29","modified_gmt":"2020-10-02T17:44:29","slug":"krispy-kreme-corporate-crime-lottery-sarbanes-oxley","status":"publish","type":"post","link":"https:\/\/www.lvcriminaldefense.com\/krispy-kreme-corporate-crime-lottery-sarbanes-oxley\/","title":{"rendered":"Krispy Kreme, the corporate crime lottery, and Sarbanes-Oxley"},"content":{"rendered":"

Today\u2019s W$J <\/a>covers the problems at Krispy Kreme.\u00a0 There is what looks like possible accounting fraud <\/a>\u2013 shading earnings to show continued growth.\u00a0 Small adjustments can be very significant, given irrational market reaction to earnings \u201cthresholds.\u201d Indeed, this is the sort of thing that just got Scott Sullivan five years at MCI.<\/p>\n

So let\u2019s do a little sentencing accounting here.\u00a0 Sullivan gets five years for engineering a fraud that got Ebbers essentially a life sentence.\u00a0 But then Ebbers protested his innocence, so count that against him. Should the officers at Krispy Kreme also do time if they are shown to have done something similar to what Sullivan\/Ebbers did?\u00a0 Their sentences would be less because of the funny accounting that\u2019s done under the sentencing guidelines, assuming those still apply.\u00a0 But is it not a crime because it\u2019s not MCI, or Enron?<\/p>\n

Is the financial engineering in the Nigerian Barge case more culpable because it\u2019s more complicated, or something?<\/p>\n

And I recently pointed to the practice at Microsoft, among other companies, of shading projections.\u00a0 That may have had a similar effect on stock price, and certainly had a bigger market effect than anything that went on at Krispy Kreme. Is this not a crime because it relates to projections rather than earnings?<\/p>\n

To me, and I\u2019m sure others, it\u2019s all fishy.\u00a0 So will somebody explain where this magic bright line is between criminal and non-criminal fraud?<\/p>\n

Finally, the W$J story notes that most of the stuff at Krispy Kreme happened after <\/em>Sarbanes-Oxley.\u00a0 And it\u2019s getting fixed by a special committee and a derivative suit that the company has allowed to proceed.\u00a0 So what is it, exactly, that we are getting from Sarbanes-Oxley?<\/p>\n

Originally posted by Prof. Larry Ribstein on Ideoblog<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"