Refco's delinquent community
Filed in archive shareholder activism by leon on August 10, 2007
Usually when there's corporate malfeasance, it involves a stack of people. Auditors look the other way, managers help themselves to the spoils and directors pretend nothing is happening.
Floyd Norris looks at this phenomenon in his piece on the Refco debacle, Is Fraud O.K., if You Help Just a Little?.
You can read it in full here.
As he shows, the problem with delinquent communities is that they can become legal quagmires.
"Does a company have any obligation to avoid transactions it knows are intended to deceive creditors and investors? What about lawyers who help structure such transactions? If other executives or directors see red flags, but choose not to investigate them, can they be held responsible?"
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