If you want to test a decision, ask yourself how this will look on the front page of the Wall Street Journal.
We see an example of that test in today’s WSJ.
Front page.
Above the fold.
Big font covering 4 columns.
Here’s the headline:
Partner who Audited Herbalife and Skeechers Admits Giving Stock Tips to Friend
How’s that looking?
The partner, from the LA office, gets to see how his actions look. On the front page. Of the Wall Street Journal.
What did he do?
Allegedly chat about client’s in the context of a buddy wondering what stocks to buy. And getting stuff, including a few wads of cash, in return. The FBI allegedly recorded him taking one envelope containing $5,000. In currency.
That’s called insider trading.
Thus far the accusations have cost him his job, his reputation, the legal fees of hiring a high-powered attorney, and an interview with the FBI & SEC. Before he’s got this wrapped up (assuming he actually did anything that is reported), it could possibly cost him everything in his retirement accounts, all his equity at KPMG, all his investments, and his CPA license. With the push from the SEC on insider trading, probably of time in the federal pen is greater than remote.
That does not look good on the front page of the WSJ.
Update: You can modify this to the “LA Times test” if you live in Southern California. Illustration of the concept: The Los Angeles Times article, Fired KPMG auditor can’t explain ‘lapse of judgment’ starts the article with the partner’s name. They have 15 major articles posted on-line about this story as of Wednesday evening.
That doesn’t look good either
Update: Second failure of the test shows up a few days later, with a color picture.
Related articles in reverse chronological order:
- KPMG partner arraigned – might plead guilty – hint on how to avoid jailtime?
- SEC files complaint against former KPMG partner
- KPMG partner indicted for insider trading. Indictment shows fiasco is far worse than shown in initial reports
- Initial highlights of insider trading by KPMG partner
- Live example of the ‘Wall Street Journal’ test
Pingback: Another handy question for decision making – will you sleep well? | Attestation Update - A&A for CPAs