Dell's Fraud Report Raises Questions about SarbOx, Earnings

from the just-a-few-pennies dept

This evening, Dell announced the preliminary results of a multi-month investigation into past accounting irregularities. As many had expected, the company revealed that management had deliberately massaged results to hit Wall Street targets. That being said, the total size of the fraud was not particularly significant. Overstating earnings between $50 million - $150 million between 2003-2006 is not all that big for a company as big as Dell. This doesn't excuse what the company did, but it does raise some questions about the incentives facing business managers. In the post-SarbOx era, these kinds of infractions can lead to serious penalties, and yet managers felt it was worthwhile to add a penny here and there in order to satisfy the Street's demands. Not only did SarbOx not do anything to prevent the fraud, but it didn't even prove to be a deterrent. The event should call into question the usefulness of the law, while also reigniting debate about the 'tyranny' of quarterly earnings, which pushes companies to make these choices.

Filed Under: fraud, sarbox
Companies: dell

German Court Says eBay Should Be Able To Tell A Fake Rolex From A Real One

from the got-any-watch-specialists-on-hand? dept

For many years, various luxury brands have had problems with people selling counterfeit goods on eBay -- leading to a variety of lawsuits. Of course, most of these lawsuits are incorrectly targeted. They're usually filed against eBay, rather than the seller of the goods. eBay doesn't inspect the goods or make any claim to the authenticity of them. That should be up to the buyer and seller to work out. However, a few months ago, it appears that a German court felt differently, and told eBay that it may be liable for fake Rolexes being sold on the site, even if eBay has no real way of knowing what's real and what's fake. The court seemed to indicate that eBay should be able to tell from the price, but that's not necessarily true. In the meantime, it's not clear why this isn't a problem that the market will start to work out by itself. For many, many years you've been able to buy fake Rolexes on the streets of New York City, but Rolex doesn't sue the New York City government for letting this happen. It recognizes that most people know that the Rolex you buy from a street vendor probably isn't real. Along those very lines, Rolex has introduced programs to designate legitimate Rolexes on eBay already -- so this seems like the type of "problem" that could work itself out without making eBay liable, but apparently it's too late for that.

Filed Under: auctions, counterfeit, fraud, liability, luxury goods
Companies: ebay