Ken,
This is no simple accounting error.
I have been on management's side during the trying past weeks accepting the
risk inherent to the environment the company operates in.
I do believe the current reaction to the announcement is overdone. It should not
have been more than 1/4 or 3/8 at the most, but given the recent performance
I am not surprised.
If this is the last of the surprises, then the stock is highly undervalued.
However, this is all immaterial.
What is material is that I, like many others, make investment decisions
on information provided by management. The timing of purchases and sales is closely
tied in with the dissemination of any type of news by the company.
Whether the accounting error is inadvertent or not has no relevance. As part of its
responsibilities management is charged with the duty to have the proper checks and
balances in place to ensure that the accounting procedures it has elected to follow
are followed. Failing is this area is a serious dereliction of duty. Whether GJ
knew about it or not doesn't really matter. What matters is that it happened on his
watch.
Also, if the error was inadvertent, it is one thing; however, if not,
it would be fraud.
It's my opinion that this is likely a screw-up in the organization and more the result
of ineptitude and lack of sufficient checks and balances, but it cannot go unaddressed.
A change is necessary, if only to restore the investment community's
confidence in management.
Mind you, I still believe the company is undervalued and that the recent moves are an
overreaction still assuming no more surprises.
I do hold the company responsible though for the fact that it misrepresented its actual
performance and thereby caused me and others to make investment decisions that led to
realized or still to be realized losses. While a class-action suit may well happen, I don't
there will be much recovery possible.
JMHO
Jan A. Van Hummel |
