Apparently they fund one of your competitors and DESTROY YOU.
(Back story: Google offered to buy wildly successful Internet coupon company Groupon for $6 billion. Groupon said, “meh.”)
Read the original:
BBC News, 12/21/20: Google eyes smaller players after Groupon: report
Ever wonder how enormous old financial firms suddenly bite the dust? Well, the answer (according to the man suing Ernst & Young for civil fraud) is that they do stupid things with the help of accountants.
According to New York Attorney General Andrew Cuomo, giant accounting firm Ernst & Young helped their client Lehman Brothers hide billions of dollars in debt so that it would look like a healthier company than it really was. For seven years. Until (surprise!) Lehman went bankrupt in 2008.
Lehman owed a lot of people a lot of money (like, billions of dollars). But they didn’t want to go around telling people about it.
credit: kf6gpe
So (according to the lawsuit) Ernst & Young helped them hide their little debt problem with a ninja accounting tactic called “Repo 105.” Basically, Lehman would sell off a bunch of their assets and use the money to pay off some debt. That day was a good day, because when they had to show their financial reports to the world, it looked like they didn’t owe billions of dollars.
But – here’s the genius part – the next day, they would buy back the assets they sold at an even higher price, taking on more debt than they had before.
In exchange for its creative accounting services, Ernst & Young received $150 million in fees from Lehman between 2001 and 2008. Ernst says it was just using “generally accepted accounting principles,” which makes you wonder what other firms have been drinking. Cuomo says it will be paying those fees back to the State of New York by the time he’s done with them.
TILE showed up for part of the Global Student Entrepreneur Awards at the New York Stock Exchange this October, and we met some young folks who made us feel bad about sleeping through college.
Kristen Santerian is still in college, and she decided to forgo sleep entirely to start her own competition-crushing moving and storage business called PennMoveOut. She seems to be dealing with the sleep deprivation pretty well to us:
Watch the oh-ficial GSEA 2010 recap video here. To see all our GSEA interviews, click here..
Apple CEO Steve Jobs is allegedly a nightmare boss, but that hasn’t stopped him from changing (or taking over) the consumer world.
“He is not somebody [who] any one of us would want watching our kids, but, in terms of running the company, he’s excellent.” – Rob Enderle, President, Enderle Group
“The resurrection of Apple is just the most astounding story that’s probably happened in business in at least a decade — you might be able to go further and say it’s a half-century. It’s on par with Thomas Edison and Alexander Graham Bell in terms of its total impact.” – Roger Kay, President of Endpoint Technologies
They can probably find a better deal anyway.
Republicans and Democrats are once again failing to compromise – this time it’s on a major tax decision for wealthy Americans.
In the Democrats’ corner:
“Just as the death tax sort of put Democrats on the defensive on the estate tax, the millionaires’ tax is putting the Republicans on the defensive on tax policy. I think it is a potent issue with the public.” – New York Democratic Senator Charles Schumer
The Republican perspective:
“They are trying to create class warfare. But I don’t care who they take it from. It’s still money out of the private sector.” – South Carolina Republican Senator Jim DeMint
Some people would shatter under the weight of Gordon Murray’s diagnosis. But he channeled his remaining energy into creating a legacy.
The five choices Murray says every investor needs to make:
“It’s American to think that if you’re smart or work hard, then you can beat the markets.” – Gordon Murray
Ireland is in pretty big financial trouble, and the government is looking everywhere for extra money. But it seems like it forgot to look at the super-low corporate tax rate.
“People feel that on the one hand, corporations, including Irish banks, caused the crisis, and therefore the whole corporate sector should pay. On the other hand, because people are so nervous about the future, they know that the corporate tax is one of the factors that attracts foreign direct investment, and therefore it would be a delicate time to touch it.” – Paul Sweeney, Economic Advisor at the Irish Congress of Trade Unions
Chris is another fine lad we met at the Global Student Entrepreneur Awards event at the NYSE. He’s been a business-starting maniac since age nine, but it took him until 2009 to be named Business Week’s Top Young Entrepreneur. In the same year, he was a finalist in the GSEA.
Today he runs a company that provides free discount cards to people without prescription drug insurance, making it more affordable for the underinsured to get the medication they need (and making a profit in the meanwhile). Here’s Chris:
Watch the oh-ficial GSEA 2010 recap video here. To see all our GSEA interviews, click here.