Pecker and National Enquirer

[TomSlick]

I have seen the reports that Pecker was granted immunity. Does anyone know if The National Enquirer was granted immunity?

Corporations can be indicted too.

[marylandblue]

1. I don't think they give immunity to corporations

only the people who work there. It's not like the corporation can go to jail.

[TomSlick]

2. No, but they can get essentially a death sentence.

Think Arthur Anderson.

[marylandblue]

3. Arthur Anderson was lynched

[TomSlick]

4. Whether or not Arthur Anderson was lynched,

and reasonable minds can differ, it is nevertheless sincerely dead. Similarly, if America Media, Inc., that publishes the National Enquirer, is indicted it might suffer a similar fate.

[marylandblue]

5. Not likely

A successful accounting firm is built on trust. Lose that and nobody will hire you. But a magazine conglomerate is based on readers of individual magazines. I never heard of AMI until today, but I heard of most of the magazines it publishes. Most of the never heard of AMI either and will still read their favorite magazines.

[TomSlick]

6. Hope springs eternal.

[marylandblue]

7. Not for me, I don't read their crap anyway.

[Kensan]

8. While your comment about accounting firms in general is true...

Arthur Andersen imploded not from a "loss of trust", but from being found guilty of obstruction of justice. The firm, as a convicted felon, could not perform audits of publicly traded companies. Between the various accounting and government regulatory agencies (FASB, SEC, etc.), the firm was stripped of their license to practice accounting in several states. Before the final implosion, the firm surrendered their accounting licenses in the remaining states.

Without the ability to perform audits for SEC clients, there was zero chance the firm could stay in business. There was a mad dash out the door of both clients and employees. The remaining "Big 4" accounting firms added to the pain, too. The former AA partners (who had the relationships with their SEC clients) were forced to accept very punitive deals. Bring the client (and your institutional knowledge) with you, but in 2 years you will transfer the client to an existing partner at "New Accounting Firm". You are then on the clock to build up a new book of business (several million $$ of fees) in 2 more years, or else.

I knew several extremely bitter former AA partners that lost their livelihoods, their homes and all their built-up capital in AA due to the criminal activities of persons they never even met. 85,000 worldwide employees at the time AA went down.

Full disclosure, I'm a former Arthur Andersen alum. However, I left the firm long before Enron (by about a decade). I was already sensing the shift in culture when it was converted from Arthur Andersen, Inc. to Arthur Andersen LLP. I thought several partners started to get sloppy thinking "limited liability" sounded really good. To paraphrase the Princess Bride, I don't think it means what they thought it meant.

[marylandblue]

9. Okay, you know more about it than I do

But from what I recall, the exodus began as soon as it came out that AA had approved Enron's screwy accounting, even before they were found guilty.

[Kensan]

10. Yes, the exodus began earlier...

When the firm was indicted, the exodus began. The writing was on the wall. I think most believed the government would do what they always do...assess a fine and let business return to normal. The stock market was still in shambles after the tech bust, and the country was still healing from 9/11. There was no way a major accounting firm would be given a death sentence, right?

The indictment signaled an ominous future. The amazing thing is that KPMG was also fraught with its own issues at the time, and was in serious danger themselves. AA just jumped off the cliff faster. The implosion of AA was enough to scare the SEC and a Senate oversight committee that another major accounting firm failure was a terrible idea for worldwide finances. So KPMG tucked its tail, paid a hefty fine, fired a few folks, and went back to work.

[marylandblue]

11. Accounting firms can also be too big to fail, I guess.