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Strategies & Market Trends : Gorilla and King Portfolio Candidates
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To: Mike Buckley who wrote (51921)7/8/2002 5:55:51 PM
From: chaz  Read Replies (1) of 54805
 
Mike...

Well, you've surprised me.

That seemed reasonable to me. He explained that he left Andersen about a month before WorldCom's internal audit discovered the problem. It's not possible nor is it a responsibility for an audit team to catch every commission of fraud for the same reason that it's not reasonable to expect that a police department should prevent or solve every crime.

Care to explain the 14 months that he was on the job while the fraud was being conducted?

When you note the timing of the "buy" recommendations and the timing of attendance at the board meetings, I think the larger issue to be exposed is that WorldCom's management clearly solicited and heeded advice by sell-side analysts. Most of us who follow this thread appreciate the reasons individual investors should not pay attention to the recommendations of sell-side analysts. For the same reason, we should be very skeptical of investing in companies whose management teams pay attention to sell-side analysts. However, virtually every time one of our companies floats a public or private debt or equity offering, it's doing so at the recommendations of sell-side analysts. That's pretty scary in my mind, more so than the sell-side analysts' recommendations to retail investors.

I thoroughly agree, and can trace that sentiment directly to the second of the eight months I spent as a sell-side broker in the early 90's.

I'll be surprised if New York doesn't criminally prosecute at least a few of the big-name analysts.

And I'll be very surprised if the federal government does.

Chaz
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