Big Trial starts tomorrow: Interesting Litigation still pending in Levi Strauss Co, “Little Rock Six” Whistleblower termination suit.

The following is published at Wikipedia, here:

Pending SOX (Sarbanes-Oxley) Litigation:

Levi Strauss & Co.

Robert Schmidt and Thomas Walsh had significant leadership roles at Levi Strauss & Co. (LS&Co), as directors of the global tax department.[21] While employed by LS&Co. in that capacity, they were instructed to withhold material documents from the IRS and to limit information to LS&Co.’s new auditor, KPMG. Schmidt and Walsh refused, advising their supervisors that they would not be a party to fraud. On December 10, 2002, LS&Co. summarily fired the two directors. LS&Co.’s termination of Schmidt and Walsh occurred approximately five days before KPMG arrived on site to conduct a comprehensive audit of the company. The trial in this litigation is scheduled to start March 31, 2008 in the US District Court in San Francisco, California.

Gerald R. Brookman was hired by LS&Co. on January 18, 2005 as an IMS/DB2 systems programmer at the company’s Westlake, Texas IT facility, at a starting yearly salary of $85,000.[22] When the Sarbanes-Oxley Act (SOX) audit conducted by E&Y in 2Q05 revealed major deficiencies, senior LS&Co. management ordered Brookman and others to conceal these problems from KPMG. On October 20, 2005, Brookman and all six employees of the transportation department in the Little Rock, Arkansas nationwide distribution center were terminated. LS&Co.’s termination of Brookman and the “Little Rock Six” occurred approximately four days before KPMG arrived on site to conduct an audit. A civil RICO federal lawsuit has been filed against LS&Co. on behalf of Brookman, the “Little Rock Six”, and 74 other LS&Co SOX whistleblowers who were terminated in 2005.

Criticisms of Sarbanes-Oxley: making companies play fair and yet still allowing them to compete globally is hard. :)

The following was Found at Wikipedia, here:

Detractors such as congressman Ron Paul contend that SOX was an unnecessary and costly government intrusion into corporate management that places U.S. corporations at a competitive disadvantage with foreign firms, driving businesses out of the United States. In an April 14, 2005 speech before the U.S. House of Representatives, Paul stated, “These regulations are damaging American capital markets by providing an incentive for small US firms and foreign firms to deregister from US stock exchanges. According to a study by the Wharton Business School, the number of American companies deregistering from public stock exchanges nearly tripled during the year after Sarbanes-Oxley became law, while the New York Stock Exchange had only 10 new foreign listings in all of 2004. The reluctance of small businesses and foreign firms to register on American stock exchanges is easily understood when one considers the costs Sarbanes-Oxley imposes on businesses. According to a survey by Korn/Ferry International, Sarbanes-Oxley cost Fortune 500 companies an average of $5.1 million in compliance expenses in 2004, while a study by the law firm of Foley and Lardner found the Act increased costs associated with being a publicly held company by 130 percent.” [23]

In a February 29, 2008 opinion column for WorldNetDaily, Ilana Mercer wrote, “The Sarbanes-Oxley Act of 2002, courtesy of the Republican Party, cost American companies upwards of $1.2 trillion. The capital flight it initiated caused the London Stock Exchange to become the new hub for capital markets.” [24]

Additional complaints have been documented in The Wall Street Journal:[25]

[Intended reform was among] the mistakes of Sarbanes-Oxley. “Reform” of the accounting industry ended up being a gold mine for the very auditing firms that Congress wanted to punish, as a few megafirms thrive in a more regulated market.