Hey, what's a $billion among sleazy friends?
By Lee Russ
Tuesday, August 29, 2006 at 05:36 PM
Corporate responsibility. What a concept. I took a college course devoted to it in the 1970s, which clearly illustrated that this was mostly a contradiction in terms. And you know it hasn't gotten better since the election of Reagan. So...how about $1 billion in settlements by major corporations to avoid going to court on various charges of fraud/slime/corruption?1. Schering-Plough To Pay $435Mln To Settle Federal Investigation
Tuesday, drugmaker Schering-Plough Corp. announced that it reached an agreement with the U.S. Attorney's Office for the District of Massachusetts and the U.S. Department of Justice to pay $435 million to settle a federal investigation into the company's sales, marketing and clinical trial practices and programs.
Under the agreement, Schering Sales Corp., a subsidiary of Schering-Plough, will plead guilty to one count of conspiracy to make false statements to the government about its sales prices and marketing for allergy drug Claritin Redi-Tabs and pay a criminal fine of $180 million. In addition, Schering-Plough will pay $255 million to settle a civil investigation into the marketing of two drugs namely Intron A meant for hepatitis B infection and Temodar, a cancer treatment.
The drug company said that the agreement reached with the U.S. prosecutors resolves the investigation that began before the new management team took over the helm in April 2003. On April 20, 2003 Fred Hassan was appointed as the company CEO and President. The same year, Schering Plough earmarked $500 million to settle federal investigations in Massachusetts and Pennsylvania into its marketing practices.
2. Prudential Settles Allegations for $600M
In one of the largest settlements to date of a case involving market-timing abuses that defrauded mutual funds and their investors, Prudential Securities agreed Monday to pay $600 million in penalties and fines to government regulators.
The settlement concludes a three-year investigation into allegations that Prudential allowed its brokers to engage in market timing, even when the mutual funds targeted by Prudential's brokers explicitly told the company that the practice was unacceptable.
Of the $600 million, $270 million will go to the Securities and Exchange Commission, which will distribute the funds to investors hurt by Prudential's actions. An additional $325 million in criminal penalties will go to the Justice Department, and a $5 million civil penalty will be paid to the Massachusetts Securities Division.
Market timing involves the frequent buying and selling of mutual fund shares to take advantage of short-term market moves up or down, and, frequently, differences in closing times and prices in markets abroad. Because the goal of most mutual fund managers is to maximize returns for long-term, "buy and hold" investors, such short-term buying and selling hurts the fund's performance.
According to the settlement reached Monday, managers at Prudential's brokerage operations (subsequently acquired by Wachovia) ignored frequent complaints from mutual fund companies that their brokers were flouting rules against market timing.
Notice that both items are datelined today, August 29, making it quite a haul for one day. Notice also that both stories mention that the "bad guys" aren't around any more. The Prudential group was bought by new, good, clean folks, and the whole corrupt management at Schering was replaced long ago.
So there, voting public, go back to sleep, all is well in corpland, you needn't pay any more attention.
Hell, I'm starting to wonder how much of this money "going" to the Justice Department will actually reach its destination, given the incredibly high character of the people running the White House and the DOJ.