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Volume No. 1 |
Issue No. 1 |
October 2002 |
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Getting to Know All About You …
Hoping to reverse rampant public suspicion and investor mistrust, publicly held companies are thoroughly
vetting the professional and private lives of candidates for top executive positions.
Back in the days before CEOs were forced to do the "perp walk" before news cameras,
corporations allowed investment bankers, search firms or high-level executives to choose
senior executives. Now that company board members are increasingly being held responsible for the
conduct of top management, they often insist on hiring accounting, security and investigative
firms to scour court documents, search federal databases and interview everyone from
long-lost college girlfriends and ex-spouses to former employers, business partners and
secretaries - even apartment doormen and clergy. In addition to such public records as
arrests and personal bankruptcies, computer forensics experts can examine computers the
executive used at a previous posting to dig up such hard-to-get information as gambling
or drinking problems, disparities in lifestyle and salary, infidelity and quietly settled
sexual harassment complaints.
… And Here's Why
Meanwhile, Business Week reports eye-opening results of a 28-question test given to more than 1,400 managers at large US corporations that was designed to gauge their level of integrity. Based on the resulting psychological profiles, executive-search firm Russell Reynolds and personality-testing firm Hogan Assessment Systems conclude that one in eight executives can be termed "high-risk" - which they define, in part, as believing that the rules do not apply to them. Compounding the problem, they rarely feel the pangs of guilt that keep the wayward impulses of the other 7 in check.
"Another Crop of Sleazy CEOs?," Business Week Online August 26, 2002
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Using Computer Forensics in Employment Law
A computer forensics specialist should be on hand whenever an employee is
investigated for potential wrongdoing, is downsized, or terminated for cause - especially when a
wrongful termination lawsuit is anticipated or when litigation against a terminated employee is
being considered. Computer forensics is not a job for the IT department. A computer forensics
expert will be familiar with a wide range of computer hardware, applications and operating systems,
and offer expertise in the specialized tools and techniques used to examine a hard drive and its
contents. Recovery of deleted e-mail and other electronic files and records is crucial evidence
in cases involving fraud, embezzlement, white-collar crime, discrimination, sexual harassment,
and theft of trade secrets. The best computer forensics specialists are
also experienced investigators who have considerable trial experience, and are well-versed in
criminal and civil procedure and evidentiary rules. The expert will establish and maintain
an unbroken chain-of-custody of the employee's computer, and preserve the state of the hard
drive at the moment the notice of termination is given to prevent accidental or intentional
deletion of the contents of the hard drive. If a hard drive has not been properly preserved
or investigated, the evidence retrieved will be compromised and could be inadmissible.
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16 Companies Miss SEC Certification Deadline
Executives at 16 of the 691 companies required to swear that they told the truth,
the whole truth and nothing but the truth in their financial statements missed the
Securities and Exchange Commission (SEC) Aug. 14 deadline. Another 256 companies have
until December to certify their SEC filings. According to the SEC, among the 16 companies
that failed to certify their financial reports: Enron and WorldCom, whose CEOs took the
helm after their companies' scandals came to light; Adelphia Communications Corp.;
CMS Energy Corp.; Consolidated Freightways Corp.; Dynegy Inc.; Gemstar-TV Guide Inc.;
Qwest Communications International Inc.; LTV Corp.; and TruServ Corp. Securities lawyers
believe that noncompliance could hurt a company's stock price or credit rating - or prompt an SEC
investigation. In any case, the one-time SEC requirement can be considered a
dry run: The July 2002 Sarbanes-Oxley Act requires all public companies' CEOs and CFOs
to certify every quarterly and annual report filed with the agency.
"16 of 691 Firms Missed Deadline,"
Washington Post, August 22, 2002
SEC Wants Brokerages to Archive Instant Messaging Conversations
Once a teen fad, consumer instant-messaging (IM) software - typically downloaded from
AOL Time Warner Inc., Yahoo Inc. and Microsoft Corp. - has invaded corporate America,
in part because business users like being able to chat with co-workers in real time and
to check which of them are online and at their desks. But IM is becoming increasingly
problematic at Wall Street firms, which are required by the SEC to archive any records,
phone calls and e-mail related to "business as such" for three years. Unlike e-mail,
which can be archived on corporate servers, consumer IM typically leaves no paper trail,
has few security features and offers weak safeguards against viruses.
Consequently, SEC rules have pushed brokerages to switch to heavy-duty
IM that maintains a paper trail, which can be crucial when allegations
of fraud or other improprieties arise.
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Money-Laundering Rules Expand
An outgrowth of legislation to combat terrorism after Sept. 11,
federal money-laundering rules went into effect in April that require firms to designate a
special compliance officer, commission independent audits, and implement policies and
procedures to identify risks and to minimize opportunities for abuse. The
new anti-money-laundering measures cover not just banks and securities, but also
credit-card companies, mutual funds, wire-transfer firms and commodities dealers, all of
which are vulnerable to organized criminal activity. In addition, international terrorists
use both credit cards and wire services to move money. Treasury also is considering new
anti-laundering rules for travel agents dealers in automobiles, planes, boats, gems and
precious metals.
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The Spinelli Report is provided without charge as a service to clients and other
interested parties by Spinelli Corporation,
a premier investigative firm integrating private investigations, computer forensics, corporate services,
forensic accounting and litigation support solutions.
If you do not wish to receive The Spinelli Report, want your subscription sent
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