Melancholy Fog

From Peter Morton, “At SEC, a modern Texas ranger hunts down the bad guys”, National Post, January 9, 1999, pp. C1, C4, in relation to Walter Schuetze:

WASHINGTON–The sun never shines into the eighth-floor office of Walter Schuetze and that is just the way the U.S. securities watchdog’s top accountant like it.

It’s always foggy, rainy and just plain awful–melancholy,” says the tough-talking Texan. “In my line of work, all I ever see is the bad. I only see those who are messing around, breaking the rules.”

…The SEC is determined to stamp out two popular and highly illegal games used by a few of the 16,000 publicly traded companies in the United States. The oldest and still number one, says Mr. Schuetze, is the premature and improper recording of revenue–booking sales before they actually happen. “But number two and fast closing on number one is managing earnings with improper use of reserves,” he says. “We are seeing all manner and kings of things being included in those reserves [that] should not be.”

…his favourite is when reserves are used by a company to boost [its] earnings to match street expectations, something that happens all too often…

The SEC’s main worry is that ordinary investors will start to read about cases and worry that publicly traded companies are somehow cheating them and that could bring uncertainty to an already overheated market.

“When my sister reads it and my cousins read it and they see me at Christmas time, they say “Walter, what the devil is going on?” he says. “What do you do if you are a regulator and get all this stuff in the headlines (about) abracadabra accounting or hocus-pocus accounting–it makes you want to do something about it.”

Though when you see the regulated world as “the bad” and are concerned about headlines…

Why there is theory versus evidence

And nearly twenty years later

What the devil

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About brucelarochelle

Practising Lawyer and Part-Time University Instructor (Accounting, Commercial Law, Organizational Behaviour); Part-Time Federal Tribunal Member. Non-practising Chartered Professional Accountant (Chartered Accountant and Certified Management Accountant).
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