This week’s issue focuses on accountants gone bad! it highlights several articles involving situations involving questionable ethics, FCPA and independence violations, and even fraud. Many of these stories play out like a soap opera and make for some interesting reading to remind you that life as an accountant is not necessarily boring!

Goldman Sachs Executive Says Libya Understood Derivatives (June 30, 2016) – The Wall Street Journal (@WSJ)

The article is an interesting summary of recent court proceedings involving a case between Goldman Sachs and the Libyan Investment Authority (LIA). Goldman is accused of “milking” the LIA of its money through sales of complex derivatives that the client contends they did not truly understand. There are also allegations of corrupt activities such as giving internships to a Libyan official’s child in return for ongoing business.

How It’s Relevant: As we all know, business ethics is critical in our profession. In addition, business and sales tactics that incorporate giving “gifts” or other favors raises potential issues under the Foreign Corrupt Practices Act (FCPA) which has been a recent focus of the SEC for registered entities conducting business overseas.

Romantic relationship caused Fifth Third to fire top lawyer, report says (August 11, 2016) – The Cincinnati Business Courier (@BusinessCourier)

Who says banking isn’t interesting. This article, that reads more like a soap opera than a business story, reports on a romantic relationship between the CEO of Fannie Mae and the Chief Legal Officer (CLO) of Fifth Third Bancorp that was exposed for all to see. While Fannie Mae did not take any action when this relationship became known, Fifth Third decided to terminate the CLO from her role at the bank.

How it’s Relevant: Can’t bankers fall in love too? Unfortunately, not when it involves someone from a major customer or business partner! This issue highlights the importance of maintaining independence; in both fact and appearance… something Fifth Third obviously believes was violated in this instance.

How Lending Club’s Biggest Fanboy Uncovered Shady Loans (August 18, 2016) – Bloomberg Business Week (@businessweek)

This articles provides a very interesting and detailed account of how one of Lending Club’s biggest admirer’s discovered a series of questionable lending practices, mostly in attempt to bolster the company’s underlying performance. By using data analytics, all provided by the company due to it “transparent” mission, this individual was able to uncover a series of lending abnormalities at the company.

How It’s Relevant: Fraud in the financial statements continues to be a concern and focus of regulators and auditors. In this instance Lending Club was making fictitious loans in order to improve quarterly and year-end financial reporting targets. No matter the size of this “questionable” activity, qualitatively this fraud would most definitely be considered material to the financial statements.

Whistleblowers Are Poised to Collect $100 Million (August 11, 2016) – The Wall Street Journal (@WSJ)

Mark Markopolos, a forensic accountant famous for his warnings (which went largely ignored) surrounding Bernie Madoff’s Ponzi scheme, is back in the news. After encouraging the SEC and other regulators to incentivize whistleblowers, Markopolos, has formed a group that advises whistleblowers and stands to take a cut of their compensation.

How It’s Relevant: In an attempt to crack down on corporate fraud and other inappropriate financial reporting, the SEC has been compensating whistleblowers for providing information to regulators that assist uncovering this illegal activity. Whistleblowers (and obviously lawyers) stand to make big bucks as a result!