SEC Charges Fluor Corp. and Executives with Improper Accounting

SEC Charges Fluor Corp. for Accounting Improprieties

The Securities and Exchange Commission today announced that Irving, Texas-based Fluor Corporation will pay $14.5 million to settle charges stemming from the company’s improper accounting on two large-scale, fixed-price construction projects. Five former and current officers and employees also agreed to settle related charges for causing Fluor’s violations.

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The SEC’s order found that Fluor, a global engineering, procurement, and construction company, bid on the two projects relying on overly optimistic cost and timing estimates and subsequently experienced cost overruns that worsened over time. Fluor then failed to sufficiently maintain internal controls to account for the projects in accordance with the percentage of completion accounting method under U.S. generally accepted accounting principles (GAAP). According to the SEC’s order, Fluor failed to include all anticipated costs that were known or should have been known in each project’s respective forecasts—thereby delaying loss recognition on each. Additionally, Fluor improperly incorporated revenue from unapproved change orders in the forecasts of one of the projects, including change orders that had not yet been submitted to, or had already been rejected by, the customer.

FASB Adopts Crypto Accounting and Disclosure Rule for Companies

The FASB, which sets accounting standards for U.S. public and private companies and nonprofits, on Wednesday voted unanimously to adopt a new standard that would require businesses to use fair-value accounting for bitcoin and certain other crypto assets. Companies and accountants have repeatedly rallied for this change, as it would allow them to recognize losses and gains immediately, and treat digital assets as they would some financial assets instead of as indefinite-lived intangible assets.

Public companies’ financial statements will have to disclose their crypto assets, separating them from intangible assets like patents and trademarks, on a quarterly and annual basis. Private companies must do the same in whichever financial reports they compile. Businesses will have to include gains and losses on their crypto assets in their net income.

The rule is set to go into effect for 2025 annual reports for calendar-year public and private companies, which can adopt the changes early. The FASB expects to formally issue the standard by year-end, a spokeswoman said.

Who Needs a Bitcoin ETF? Actually the SEC Does

Should the US Securities and Exchange Commission approve an exchange-traded fund focused on the spot market for Bitcoin? The question has yet again gained relevance, thanks to the District of Columbia Court of Appeals, which last week reversed the SEC’s decision to reject a Bitcoin ETF proposed by Grayscale Investments.

The answer is yes: With a revised approach to the issue, the SEC could turn its loss into a win.

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In the absence of action from Congress, regulators should do what they can to bring crypto into line without killing it off. Here’s an opportunity. People would still be free to lose their money on ill-considered bets. But they’d be much less likely to get ripped off along the way.

With SBF, Gisele, and Michael Lewis at Peak of Crypto Craze

From the beginning, I had thought that crypto was pretty dumb. And it turned out to be even dumber than I imagined. There was no mass movement to actually use crypto in the real world. The crypto apps hyped as the future of finance and art barely worked. As I crisscrossed the globe, from El Salvador to Switzerland to the Philippines, all I saw were scams, fraud, and half-baked schemes. By the end, I’d find myself in Cambodia, investigating how crypto fueled a vast human-trafficking scheme run by Chinese gangsters.

I’d grown up reading Lewis’s books, including Liar’s Poker and The Big Short, and when he and Bankman-Fried first came onstage, I was excited to hear insights from the guy who taught me how Wall Street blew up the world economy with collateralized debt obligations. Instead, Lewis said he knew next to nothing about cryptocurrency. But he seemed quite confident that it was great. He went on to opine that, con­trary to popular opinion, crypto was not well suited for crime. Lewis pos­ited that U.S. regulators were hostile to the industry because they’d been brainwashed or bought off by established Wall Street banks. I wondered if he somehow hadn’t heard about the countless crypto scams, but the thought seemed preposterous.

“You look at the existing financial system, then you look at what’s been built outside the existing financial system by crypto, and the crypto version is better,” Lewis said.

Crypto Crackdown Devastated San Francisco, Ripple’s Larsen Says

San Francisco was set to become “the blockchain capital of the world” but lost its status because of hostile US government policy and regulatory crackdowns, according to Chris Larsen, co-founder and executive chairman of crypto pioneer Ripple Labs Inc.

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“They pretty much killed San Francisco from being what it was,” Larsen said. “We owned it and we don’t anymore because the Biden administration, for whatever reason, decided they want to push this industry offshore.”

Ex-US prison counselor admits accepting bribe from Galleon’s Rajaratnam

A former correctional counselor at a federal prison in Massachusetts pleaded guilty on Wednesday to secretly accepting tens of thousands of dollars from a wealthy inmate identified by a source as Galleon Group hedge fund founder Raj Rajaratnam.

William Tidwell, 49, did not mention Rajaratnam by name when appearing before a judge in Boston to admit to accepting about $90,000 in exchange for giving favorable treatment to a wealthy inmate at the Federal Medical Center Devens in Ayer, Massachusetts.

But a person familiar with the matter has previously said the inmate was Rajaratnam, who was convicted and sentenced in 2011 to 11 years in prison for insider trading and was released early in 2019.

ESG-Related Suit Against Unilever Based on Ben & Jerry’s Board’s Resolution Dismissed

As the phenomenon of ESG-related litigation has developed and evolved in recent months, it has unfolded that the lawsuits are not, as was expected, being filed against ESG laggards, but instead are being filed against companies that were proactive on ESG-related issues. One of the cases illustrating this development is the securities lawsuit filed against the consumer products company Unilever, based on allegations that the company had failed to disclose a resolution passed by the independent board of its Ben and Jerry’s subsidiary to end ice cream sales in occupied Israeli territories. On August 29, 2023, In a ruling that suggests that these kinds of ESG-related cases could face challenges, Southern District of New York Judge Lorna Schofield granted the defendants’ motion to dismiss the lawsuit, on the grounds that the plaintiff had failed to sufficiently plead scienter. A copy of the August 29 opinion and order can be found here.

Former OpenSea manager withdraws application for bail pending appeal

A former manager at nonfungible token marketplace OpenSea sentenced to three months in prison for insider trading has opted to serve the sentence while his appeal is pending.

On Sept. 6, Nathaniel Chastain’s lawyers filed a letter with a New York District Court informing the judge that Chastain decided to withdraw his application for bail pending appeal.

As a result, per the court’s previous order and judgment, Chastain will self-surrender by Nov. 2 to begin serving his sentence while his appeal is pending.