Cherry-picking: Some PCAOB inspection results and some tragic news
It's the hazy, lazy last days of summer, but news about accounting, audit and corporate frauds and malfeasance took no vacation.
It's the hazy, lazy last days of summer. I've been preoccupied the last few watching the Democratic National Convention in my hometown of Chicago. It's wonderful to see all the shoutouts to the city and the local journalists and celebrities.
But the news about accounting, audit and corporate frauds and malfeasance took no vacation the last few weeks.
Mike Lynch tragedy
First, I want to say a few words about the tragic death of Autonomy's Mike Lynch and his attorney Chris Morvillo. From the FT:
The bodies of UK tech entrepreneur Mike Lynch and four of his guests on the superyacht Bayesian have been recovered, three days after it sank off the coast of Sicily, according to Italian officials.
The officials said the bodies of Christopher Morvillo of the law firm Clifford Chance and Jonathan Bloomer, chair of insurance group Hiscox and Morgan Stanley International, alongside their wives, Neda Morvillo and Judy Bloomer, have been retrieved.
On Friday, the body of Lynch's 18-year-old daughter, Hannah, was also recovered.
I have written extensively about the HP-Autonomy case and recently about Mike Lynch's trial, which he, with representation from Chris Morvillo, beat handily.
I also wrote about cases that bother Robert Morvillo, and a nephew E. Scott Morvillo, handled.
In a case of not really a coincidence, Rohit Bansal’s attorney was E. Scott Morvillo.
PCAOB-turned-KPMG partner Brian Sweet’s attorney was Richard Morvillo, E. Scott’s uncle. Richard Morvillo also had some strong opinions about the eventual PCAOB fine for Scott Marcello, the head of KPMG’s audit practice who was mysteriously not charged by the SEC or DOJ. (I can not find anywhere the name of Marcello’s attorney, but would not be surprised to find it was a Morvillo.)
Looks like Rohit Bansal’s conviction is different and can stick.
I did ask E. Scott and Richard, who are now both at Stroock LLP, if they plan to try to get their respective clients’ guilty pleas vacated. I will let you all know if I get an answer.
I never got an answer.
More about Chris Morvillo and his illustrious attorney family from the FT.
[Chris] Morvillo cut his teeth as a federal prosecutor, working on cases related to the 9/11 attacks and securing the conviction of lawyer Lynne Stewart for assisting terrorism during his time as assistant US attorney for the Southern District of New York between 1999 and 2005. He joined Clifford Chance after leaving the New York trial firm where he worked with his father, white-collar criminal defence attorney Robert Morvillo, renowned for defending Manhattan clients including Martha Stewart in her insider-trading case and Hank Greenberg, the former AIG boss.
Chris and his brothers Greg, Scott and Robert worked together at Morvillo, Abramowitz, Grand, Iason, Anello & Bohrer, alongside their father, before his death. Weingarten said the brothers were a “New York Italian family and so fun to be around”.
It's a tragedy all around, including for the family of Lynch's co-defendant, Autonomy former vice-president of finance Stephen Chamberlain, who was hit by a car in the U.K. the same day Lynch's yacht sunk.
Monday’s yacht incident came on the same day as the death was confirmed of Lynch’s co-defendant in the US fraud case, Stephen Chamberlain, who was hit by a car in Cambridgeshire, England. Chamberlain, a former vice-president of finance at Autonomy, went on to become chief operating officer at Darktrace, the cyber security company co-founded by Lynch in 2013.
May they all rest in peace.
PCAOB's latest audit firm deficiency reports
The PCAOB's reports of its inspections — performed in 2023 —of audits of public companies’ 2022 financial statements, were released on August 15, 2024.
The media reports describing the results were like the blindmen of Indostan and the elephant, each "seeing" something different based on the unique perspectives and audience focus.
After the jump, I’ll discuss the various media takes on the latest deficiency results and another WSJ report on some EY moves that are supposedly in response to its repeatedly bad results.