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April 21, 2008

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Independent Accountant

Tom:
I have blasted Cox's SEC at my website for months. It's awful. I remember WorldCom. If I recollect, it made a series of journal entries aggregating $3.85 billion capitalizing expenses as fixed assets. Arthur Andersen, in its gross incomptence, did not test any of these fixed asset "acquisitions". In reading about this at the time, I concluded a kid with 18 months audit experience should have done better. For that matter, a kid half way through accounting 205, auditing, who read the chapter in Montgomery's about fixed assets should have done better.
This "no cash settlement" is another disgrace.
Yes, there is a concept in the law called collateral estoppel, which would admit as a fact that which was admitted in court before.
I have advocated for years ending the SEC's ability to settle a case without an admission of wrongdoing. I think in terms of deterrent effects, the public would be better off having the SEC bring 10% of its current cases and ending each one with a "no action letter", jury trial for civil fraud or criminal referral to the DOJ. As things stand, the SEC looks like another extortion racket to me, like the DOJ and its "deferred prosecutions", which have been in the press of late.

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