Posts Tagged ‘SEC’

Lolz! SEC Says WTF to Groupon Accounting Language

Friday, July 29th, 2011

social-media.jpg
(image credit: webtreats)

You know how (old) people are always saying that “texting and Facebook are the end of the world because kids can’t write anymore and say ‘u’ instead of ‘you,’ blah blah blah?” (like, omg, it’s nbd…)

Well, the SEC is now taking issue with the way Groupon and other start-ups are reporting their finances. Groupon, which is preparing for its IPO (i.e. selling shares of itself to the general public), is using some new – and misleading, according to a lot of financial experts and regulators – terminology to talk about how much money they are worth.

Other web and social media start-ups have done this sort of thing in the past – like talking about “eyeballs” (the number of people who view a website) instead of dollars to demonstrate a company’s value. However, some are saying Groupon is going too far, and others are saying stuff like “eyeballs” should never have been put next to traditional financial metrics in the first place.

So, do you think this is just an example of old finance not really getting the new way stuff works, or are Groupon and Zynga trying to punk us?

Embezzlement is…

Monday, July 25th, 2011

Embezzlement is taking something for personal gain that you’re supposed to be looking after for someone else.

It often happens in small amounts over time, and can sometimes go undetected for years. This is why accounting is so important – and why we need watchdogs like the U.S. Securities and Exchange Commission (SEC) to growl at offenders.

Examples of embezzlement include someone in charge of a trust or an investment fund snagging some of the money in their care, or those at the head of a nonprofit tweaking the books so that everything looks normal… while dollars secretly slip out the back door.

The SEC Boosts Investors’ Influence Over Management

Friday, July 30th, 2010

In the lopsided world of shareholder voting, investors have to posses incredible gumption to effect any kind of change within a company.

  • In most companies, the management owns the majority of the stock, meaning that shareholders have little influence in a company’s policies.
  • The Securities and Exchange Commission is trying to even the playing field for shareholders, making it easier for them to effect change within a company.
  • The SEC is imposing nonproxy measures – like electronic surveys – to gauge whether or not investors support management. And yet, despite these efforts, because of money and knowledge, the management still wields most of the power.

Best Quote

“Time and again, we have brought opportunities [for mergers or acquisitions] to the attention of the board. Each time, he says, the suggestion was rebuffed or ignored. It’s been a decade of complete nonaction.” – Shareholder, Cadus Corportation

What do you do if someone gives you insider information?

Wednesday, October 7th, 2009

When someone has privileged or sensitive non-public information about a company that could affect its share price once the information becomes public, they can use that information to either buy or sell stock at the expense of the people they sell to or buy from who don’t have this information. This is called insider trading and it’s illegal. Let’s say you work at a company and know that the company just lost a ton of money, even though the public thinks the company is doing great. If you sell  your stock to the unwitting public, that’s insider trading.

But what if you are just given the information and aren’t actually an “insider” at the company? This is often called “tipping,” and it’s still illegal for you to trade based on that privileged information because the effect is the same – if people think that it’s not safe to invest because they are going to be taken advantage of by sneaky insiders and their friends, they won’t buy stock, and that’s bad for everyone.