2002
Answer: SOX act (2002)
First 2 pics are logos of Enron and Worldcom respectively, perpretators of accounting fraud which were the reasons for this act to come in to being.
Next clue is the year in which it came.
And the last one is GW bush who signed the act.
Malcontent got it on the second try....(it was a guess.. hmmmm... ;-) )
Rana got a really compelling connect ... I will give that too... so both are winners this time... Congrats!!!
By the by... Sorry for the delay :-(
3 comments:
Answer - Arthur Anderson LLP
Connect-
It was the accounting firm for Enron, WorldCom, and also the accountant for a small corporation named for Harken Energy (GWBush was a director).
Fifteen years ago, when George W. Bush was a businessman faced with fiscal failure, Harken Energy bought Spectrum 7, a small company of which Bush was then CEO. Since Spectrum 7 was unprofitable and saddled with debt, the deal brought Harken little gain but the CEO's connections to his father - who happened to be the President of the United States.
Later, although not before our tale is concluded, Harken itself would turn into a company with troubles of its own. But while it appeared healthy, Harken extended generous stock options to the son of President George H. W. Bush. Then the fancy accounting began. Paul Krugman has reported in the New York Times that it involved creating a dummy entity to serve as paper front to then purchase "some of the firm's assets at unrealistically high prices, creating a phantom profit that inflates the stock price, allowing the executives to cash in their stock."
Here is Krugman's description of what happened at Harken Energy, a description which has subsequently been reported all over the nation. "A group of insiders, using money borrowed from Harken itself, paid an exorbitant price for a Harken subsidiary, Aloha Petroleum. That created a $10 million phantom profit, which hid three-quarters of the company's losses in 1989."
Once Harken's stock price was inflated by means of this maneuver - significantly, Arthur Anderson was the accounting firm, and Mr. Bush was on Harken's audit committee - Mr. Bush was able to sell his shares at a large profit shortly before the price of Harken stock dropped substantially. To be specific, on June 22, 1990, Mr. Bush, a director of Harken, sold 212,140 shares for $4 a share, for a total of $848,000.
Pic1: Enron
Pic2: Worldcom
Both perpetrators of accounting fraud
in 2002.
Common factor: Arthur Andersen ?
or the Sarbanes Oxley Act (2002)
for greater corporate disclosure.
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