Should executives be in jail for mortgage fraud and related reporting?
I didn’t see the 60 Minutes segment on Prosecuting Wall Street until this evening, but it is shocking to hear that not a single prosecution has yet been brought.
I strongly recommend viewing the segment (available in two YouTube segments) and I welcome your views on the following:
- Did the segment make the case that there should have been prosecutions under SOX? They didn’t explain how material the over-valuation of the mortgages were to Citi and Countrywide, but I suspect the numbers were material and the internal control weaknesses should have been classified as material.
- Do you agree that persuasive evidence of deliberate fraud might have been difficult to obtain?
- Should the board have taken action?
- Should internal audit have been more prominent?
- Shouldn’t the risk officer have been more actively engaged?
- There seems to have been a defect in the control environment, the tone at the top and the corporate culture. Shouldn’t this have been identified as an issue by the external auditor?
I don’t have inside knowledge and am not a lawyer. But I found the segment disturbing and suspect you will as well.