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Crook Alert 2006 Retrospective

Updated on August 7, 2007

Gretchen Morgenson

A Year to Suspend Disbelief in Corporate America

NY Times financial columnist Gretchen Morgenson summarized the financial and corporation scandals of 2006 in her year-end column today. Here are some of the individuals she recognized for achievements in corporate malfeasance:

The "Where are the Shareholders's Pensions?" Award to Hank McKinnell, the former CEO of Pfizer who got an $82 million pension even as shareholders lost $137 billion on his watch.

The "Dog ate my Email" award to Morgan Stanley, accused by regulators at NASD of using the 9-11 attacks as an excuse not to cough up email records that aggrieved clients needed for their arbitration cases. In fact, millions of these supposedly destroyed emails were available shortly after the disaster but were not produced for investors. The case was the latest in a string of stonewalling by the firm.

The "Three Times a Charm" award to federal prosecutors who won a conviction of Walter A. Forbes, the former CEO and head book-cooker of the Cendant Corporation, on the third try. When he resigned from the company he said he would repay his $47 million pension if he were convicted of a crime. Anyone think that promise will be kept?

The "Owners don't mind a little chilseling" award to Dr. William W. McGuire, founder and former CEO of the UnitedHealth Group who came under fire for receiving stock options that were artificially back-dated to bolster their value. Before he resigned, Dr. McGuire played down his well-timed option grants with this comment: "This isn't a giveaway of money that occurs out of the premiums of health care recipients. These are shareholder dollars." Well, in that case, go right ahead.

The "How to Blow through $6 billion award" to Amaranth Advisers, a hedge fund that said it was up 25 percent one day and then was practically kaput the next week. Wrong-way bets on natural gas prices made $6 billion evaporate almost overnight. It takes real skill to lose that much money that fast.

The "Follow the Money" award to James B. Lockhart III, the director of Federal Housing and Enterprise Oversight, who sued Franklin D. Raines, former CEO of Fannie Mae, to recover about $85 million in bonuses he received but did not earn.

The "Bungling gumshoes" award to Patricia Dunn, former H-P CEO, and her band of goofy snoops who failed in their efforts to identify and punish a board member considered too talkative. Ms. Dunn oversaw the hiring of private investigators who improperly secured directors' phone records as well as those of financial and tech reporters.

Ms Morgenson's column and bio are linked below. She and Floyd Norris also of the NYTimes and Jonathan Clements of the Wall Street Journal are my favorite financial writers. They are all knowledgeable and provide good information for individual investors.


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