Real world expertise?Maybe Cox will be better than the rest of us at sniffing out fraud and financial malfeasence -- he's got some relevant experience, after all:
THE lawyer solemnly told regulators it would be far too costly for a mutual fund to seek appraisals of its assets, and no appraisals were made. When employees of the investment firm suspected something was amiss, they were reassured when a government auditor pored over the books and concluded that all was well.
And so the fraud continued for more than a decade. It later turned out that the assets sold to investors were largely fictitious, and that the supposed auditor, who presented credentials showing she worked for the California Department of Corporations, was in reality an actress hired by the man running the fraud.
The lawyer who argued that it would be a waste of money to require appraisals is about to be inundated with appeals to reduce the cost of regulation. That lawyer was Christopher Cox, who is likely to be confirmed today as chairman of the Securities and Exchange Commission. Mr. Cox did not know he was representing a crook at the time he wrote the letter. It was years later that William Edward Cooper, whose investment firm Mr. Cox was representing, pleaded guilty and was sentenced to 10 years in prison.
At his confirmation hearing this week, Mr. Cox emphasized that he was dismissed as a defendant in the civil suit filed by the receiver for the defrauded funds. He did not point out that Latham & Watkins, his former law firm, paid an undisclosed amount to settle the suit.
Palmkin Demolition Part I
Dear Palmkin,
I don't know how to respond to you civilly, so I will blog instead. Viva la Internet! I am opperating on the assumption that this will fly under all radar screens and therefore remain essentially private. If not -- oops!
I plan on responding to little chuncks of your letter as the mood strikes, so chunk one:
"
Overall, we believe that the RFP question about the value of the auditing profession is simply not adequately addressed. Rather, the draft substitutes a focus on vaguely defined “audit quality” as a more important issue that is somehow related to value. We believe that this is not responsive to the RFP. "
I must admit that it is difficult to imagine that your inability to understand how quality relates to value is not willful. Are you arguing that an audit signed by a group of monkeys in a room is as valuable as a DT audit? If so, the question of the value of an audit does indeed become something more than a rhetorical question. And if audits done by monkeys and those done by DT are indeed of different values, the question then remains, by how much? And there we arrive, with a screeching halt, at the notion of quality. Because, really, that is what divides DT from a roomful of monkeys, no? (Unless the whole question of souls matters, but I digress...)
As an aside, who gives a rat's ass if we respond to the RFP? What matters, for contractual purposes, is whether we did what we said we would do in the proposal and the various memoranda of understanding that followed. And certainly, the notion of assigning a value to an undefined "auditing" is irrelevant from any public policy perspective too. Instead, we can talk usefully about assigning values to audits done by monkeys, or audits done by management's yes-men, or audits done in minimum conformance to GAAP and GAAS, or audits done by those who take their duty to shareholders seriously.
Sigh.
Maybe I'm back...we'll see if I have a moment to actually write anything, but I've been having bloggish urges lately...
