Posted by Shahrani Bhatti.

On January 30th of 2018, U.S. regulators made it known that they feel Congress should expand regulation of the bitcoin as well as a growing number of other cryptocurrencies. Their reasoning being that the currency is not subject to investor-protection laws. The chairmen of the SEC and the CFTC told senators that the exceedingly popular cryptocurrency has surmounted state regulation. This is only one of a growing number of concerns, as U.S. banks are taking a step forward and stopping credit card purchases of bitcoin in addition to bitcoin prices dropping dramatically as governments in China, India and South Korea have placed restrictions on cryptocurrency trading.

The chairmen continued, saying that in order to regulate cryptocurrencies and protect investors, Congress would need to become involved as the SEC and the CFTC hold no power in regards to the market of products like bitcoin. At a testimony earlier this year, Christopher Giancarlo of the CFTC said that if they were given jurisdiction in this situation that it would be a, “dramatic expansion of the CFTC’s regulatory mission.”

Both market regulators have also halted illicit operations that have attempted to capitalize investors’ growing desire for returns similar to that of bitcoin’s skyrocketing $17,900 in only December of last year. The SEC has also stopped initial coin offerings, a fundraising method that has accumulated billions from investors in exchange for the issuance of new digital currencies like the bitcoin, as the demand for them continues to grow. Chief of the SEC, Mr. Clayton said that unlike the bitcoin, however, that these other issuances leave the issuer vulnerable to federal anti-fraud and investor-protection laws. Because of unregulated exchanges, Chief Clayton says, market prices can intensely rise.

While the bitcoin is still mainly unregulated, its derivatives are continually inspected. The CTFC has examined how these tokens should be allotted for trading. Mr. Giancarlo has come up with a new process for other duplicate tokens of the bitcoin, which consist of intensified information sharing agreements between exchanges and the CFTC, and agreements by exchanges to coordinate launches with CFTC’s staff.

I believe cryptocurrency regulation is a necessity at this time. Investors need to be protected from fraud. If the U.S. begins to regulate these currencies, then other countries may also follow suit. The cryptocurrencies may also grow and lead to an increased number of jobs which can only benefit the U.S. economy. If this benefits the U.S. economy, a larger standard of living will persist and the U.S. will become a more powerful country — as a high standard of living among people, high GDP and a good economy are the defining features of powerful countries. Cryptocurrency may give the current U.S. national currency a run for its money, but in the long run, the benefits will outweigh the costs as cryptocurrencies are easier to manage and track as the exchanges are basically exclusively carried out online.

Shahrani Bhatti is an economics major at the Stillman School of Business, Seton Hall University, Class of 2020.

In 2017, Bank of America came to the agreement to pay $66.6 million to end its lawsuit accusing it of high rate of interest and fees from customers, who have checking accounts that were overdrawn for several days. The amount of interest and fees Bank of America charges was decided unlawful. The case was a lawsuit between the company and the federal government. The lawsuit began in 2016 and the final settlement of this lawsuit was disclosed in San Diego’s federal court on November 3, 2017.

According to the final settlement, Bank of America has been overcharging interest and fees for over five years (since February 2014) and the bank has made a huge amount of profit by overcharging customers. The settlement was predicated on the fact Bank of America needed to “stop charging for extended overdrafts,” which at the time the customers, who have overdrawn their account, will not have to pay the extensive amount of interest to Bank of America. The decision made by the court will save customers about $1.2 billion. After the court decision was made, Bank of America had its attorney sent out an email to customers indicating that “Bank of America account-holders will no longer have to endure these charges.”

This is a great example of how business law made by the federal government could protect customers. Bank of America used to charge a $35 fee for overdrawing their accounts, and if customers want to continue using their account, they will have no choice but pay this high extensive fee. The lawsuit perfectly shows that federal government protects the people’s right as customers and helps them to be fairly treated by large corporations.

Zhanli Peng is a finance major at the Stillman School of Business, Seton Hall University, Class of 2019.

Reference:

Aubin, D. (2017, November 02). Bank of America settles overdraft lawsuit for $66.6 million. Retrieved February 01, 2018, from https://www.reuters.com/article/us-bank-of-america-overdrafts/bank-of-america-settles-overdraft-lawsuit-for-66-6-million-idUSKBN1D22ER

Posted by Lindsey Pena.

In business, ethics are strong guiding principles that aid managers, employees, and investors to correctly conduct business transactions. When ethical matters are disregarded, the end result is fraud, embezzlement, among many other illegal actions. One of these illegal actions is called a Ponzi scheme. Perhaps the most famous Ponzi scheme was devised by Bernie Madoff, a well-respected financier, who conned investors out of an estimated $65 billion. Madoff was caught in December of 2008 and charged with 11 counts of fraud, perjury, theft, and money laundering. He ultimately faced 150 years in prison as a result of his decades long Ponzi scheme.

Because of the magnitude of this Ponzi scheme, eight years later, the consequences are still being addressed. Recently, the estate of Stanley Chais, one of Bernie Madoff’s friends, agreed to pay the victims of Madoff’s Ponzi scheme $277 million to settle claims that insisted Chais profited from the scheme. Irving Picard, a trustee liquidating Madoff’s firm, has recovered more than $11.2 billion for the investors who were conned. They achieved this my suing the banks and offshore accounts that hid the money in addition to investors who profited from the fraud. In the 2009 lawsuit against Chais and his wife, Picard claimed that they “reaped about $1 billion in profit from fake securities transactions at Madoff’s firm.” Chais also reaped rewards through fees that he would earn when he gave his customer’s money to Madoff’s firm. In addition to this, Chais was also sued by the SEC in 2009 because he “steered assets from three investment funds to Madoff, “despite having clear indications Madoff was engaged in fraud.”

Chais, along with five of Madoff’s employees, were not the only ones who received consequences. Thousands of innocent investors trusted Bernie’s reputable, veteran background hoping to make profit from their investments. While reading this article, I could not help but to think about the Kantian ethics which states that a person should evaluate their actions by the consequences if everyone in society acted the same way. Bernie Madoff made the exception for himself when he decided to execute the treacherous plan and the consequences of his actions will cost him the rest of his life.

Lindsey is an accounting major at the Feliciano School of Business, Montclair State University, Class of 2019.

Posted by Kosta Arvanitis.

In an article written by Sophia Pearson and Elizabeth Amon, they update us on the on-going recovery of funds for Bernie Madoff’s Ponzi Scheme victims. Being the biggest one to date, it has been a grueling process in recovering the billions of dollars lost tied to the scheme. In this specific case, FutureSelect Portfolio Management sued EY in 2010 over faulty audits tied to a Madoff-linked feeder fund, Tremont Group Holdings Inc., and ultimately won a portion of its $112 million loss back. This is just the one of many victims of the scheme; and since Madoff’s incarceration, only 34% of the billions of dollars of losses have been recovered by his thousands of victims. The Washington state court for FutureSelect’s case found that the accounting giant was negligent by signing off on audits of billions in assets that didn’t exist.

It is rare that a negligence case arise against a Big Four accounting firm. This case was brought because under a Washington state securities law, it is more protective of investors than other federal and state statutes (Amon Pearson 4). The main accusation of FutureSelect’s was that EY relied on audit reports done by Madoff’s notorious accounting firm, Friehling & Horowitz. They claim that EY failed to question the firm’s professional reputation; and in doing so, took an enormous risk and lost $112 million in its investment fund. The audit reports were of Rye Funds, managed by Tremont Group Holdings Inc., who was also sued by the company. It appeared as though EY failed to perform adequate procedures in testing the existence of Rye’s assets on their financial statements, which FutureSelect claimed in court documents.

Here are the facts. EY audited Rye Funds, who were managed by Tremont Group. Tremont was the second largest feeder into Madoff’s multibillion dollar fraud. EY also audited Tremont through 2008, and supposedly did not suspect a thing even though Madoff’s assurances showed that Rye outsourced investment decisions, and even record keeping (which should have waved red flags). EY’s spokesperson Amy Call Well, stated that EY technically did not audit a Madoff entity, that they were among many auditors who also chose to use Madoff as their investment adviser. They mistakenly trusted the work done by Madoff’s accountant, saying also that they couldn’t have seen the Ponzi scheme coming. Another important factor is that in 2013, FutureSelect opted to pursue its own case when Tremont and Madoff’s brokerage agreed to a $1 billion settlement that would free up money to repay other victims of the scheme. FutureSelect tried to see if they could be more successful in conducting their own case. The question on all of this is whether EY did everything they could in their power, through adequate audit procedures, to uncover any potential fraud. In which case, there were billions in assets that did not exist that EY failed to detect, which showed EY’s negligent misrepresentation. In the end, FutureSelect’s awards netted $10.15 million, of which EY was found half liable, and FutureSelect half liable of the total $20.3 million in damages.

Kosta is a graduate accounting student with a certification in forensic accounting at the Feliciano School of Business, Montclair State University.

Posted by Muhammad Azeem.

Playing the role of a forensic accountant can be a fundamental one as it will influence various individuals whether in a business valuation or in a fraudulence sense. This article talks about how forensic accountant can play an indispensable part in perceiving issues and working up new tradition proceeding, irrespective of facing issues during the trial.

When in doubt, forensic accountants will join money related and legal capacities in choosing the proximity of a wrongdoing. Also, they can use their skills and expertise in recognizing those factors that should be considered in a business valuation. The arranging of using a forensic accountant could in like manner ask for quick and excellent results that oblige relationship with existing clients.

Whether it is for the inspirations driving business valuation or diverse examination of data, an accountant can be a fundamental part in recognizing issues. Observation is one of the biggest issues that forensic accountants face. If you are estimating a business or attempting to choose something that requires examination of a huge amount of data, an expert accountant might be the individual you require at the end.

Muhammad is an undergraduate student in accounting at the Feliciano School of Business, Montclair State University.

Article Link: http://ezinearticles.com/?What-Are-the-Biggest-Issues-Facing-Forensic-Accountants&id=9240899

Posted by Sarah Velez.

International business relations is a major component of the United States economy. Foreign countries send their ships to the United States to pick up shipments and deliver products. While this global trade relationship is highly beneficial, the challenges that arise as a result of compliance issues and differences in ethical standards have recently been brought to light. The article “Greek Shipping Companies Fined $1.5 Million for Pollution” written by Gene Johnson of the Associated Press, reports a case of a Greek vessel that “deliberately pumped oil-polluted water into the ocean, then repeatedly lied and falsified records in an effort to deceive inspectors with the U.S. Coast Guard.” These illegal actions led to a million and a half dollar fine to be paid by the companies that jointly own Gallia Graeca, the Greek vessel.

In October of 2015, Gallia Graeca arrived in Seattle to pick up a substantial shipment of soybeans. This ship, owned by both Gallia Graeca LTD and Angelakos SA, was routinely inspected by U.S. Coast Guard Petty Officer Daniel Hamilton once it arrived at the port. As reported by Petty Officer Hamilton, the oil was not properly cleaned and it was actually in areas where it should not have been as a result of the poor maintenance of the oil-water separator. A deeper investigation made by the prosecutors showed that the ship had discarded “5,000 gallons of oil-fouled bilge water” (Johnson). In addition to knowingly dumping this substantial amount of oil, the engineers on the ship also presented the U.S. Coast Guard with false records and feigned the functioning of the oil-water separator. According to the U.S. Attorney’s Office, company executives were aware of the entire operation which shows the unethical behavior throughout the company chain.

While the Coast Guard has reported cases of sea pollution, they consider that holding corporations, as well as individuals, criminally liable is “notoriously difficult to detect and prove” (Johnson). Not only were the two companies charged with forging log books and polluting, but other involved individuals were also held accountable and the engineers on board were sentenced to jail time. U.S. District Judge John Coughenour stated that this case “will resonate with other parties in this industry and cause them to pause when they think about creating a corporate culture that encourages deception.”

Sarah is an accounting major at the Feliciano School of Business, Montclair State University, Class of 2019.

Posted by Ahmed Alzahrani.

In this article, the rapper DMX is accused of evading tax. The rapper pleaded not guilty to any of the charges against him.  He was later released in prison after spending one day in jail; this was after he paid $500,000 bond. The persecutor asserts that Earl Simmons also known as DMX evaded an estimated $1.7 million in tax in the peak of his profession between 2002 and 2005.

He purportedly avoided paying taxes, including establishing accounts on other names and paying most of his expenditure in cash. This was a violation of the law whether you are a celebrity rapper or not; paying taxes is necessary to all Americans. The prosecutor also indicated that DMX failed to file his returns in the period between 2010 and 2015; the prosecutor added that the accuser filed a fake affidavit in the US Bankruptcy Court (LIBBEY, 2017).

The bail postulated that DMX to be restrained in New York City. However, his lawyer reported that he would ask for permission for the accuser to travel for a show performance in summer. After the hearing, Mr. Simmons (aka DMX) told the journalist that his faith played a significant role in coping with a legal issue. It gave him the courage to face the situation.

Ahmed is a graduate accounting student at the Feliciano School of Business, Montclair State University.

Reference:

LIBBEY, P. (2017, July 16). DMX Pleads Not Guilty to Tax Fraud. Retrieved from The New York Times: https://www.nytimes.com/2017/07/16/arts/music/dmx-pleads-not-guilty-to-tax-fraud.html?rref=collection%2Ftimestopic%2FTax%20Evasion&action=click&contentCollection=timestopics&region=stream&module=stream_unit&version=latest&contentPlacement=1&pgtype=collect.

Posted by Basil Almubaddil.

On July 14, 2017, a renowned rapper by the name DMX pleaded not guilty to 14 charges against him concerning tax fraud. This was after he had spent a night in jail and later posted a $500,000 bond and he was released. According to the prosecutor, DMX whose real name is Earl Simmons had evaded $1.7 million in taxes during the peak seasons of his career from the year 2002 to 2005. “DMX allegedly went out of his way to evade taxes, including by avoiding personal bank accounts, setting up accounts in other`s names and paying personal expenses largely n cash.” The prosecutor clearly stated that no one  has the right to evade taxes regardless of title or fame. “Celebrity rapper or not, all Americans must pay their taxes.”

In addition, DMX was charged with failing to file tax returns from 2010 to 2015 in the United Bankruptcy Court. The bailed agreement argued that DMX is confined to the New York City area. However, his lawyer, Murray Richman, said that he was going to request permission for DMX to travel and perform his shows during the summer season that followed.

Mr. Simpson is quite a wealthy man.  This is because between 1998 and 2003, five of his albums ranked No.1 on the Billboard 200 chart. Mr. Simpson has also acted in various films like “Romeo Must Die” and “Belly” among other films. After the hearing on the charges against him, DMX told the reporters that his religious faith had been so helpful to him in dealing with legal troubles. “It`s allowed me not to be scared of the situation and face it head-on.” In addition, DMX told the reporters that his life was in God`s hands.

Basil is a graduate accounting student at the Feliciano School of Business, Montclair State University.

Reference:

In February 2016, a jury awarded a woman $10 million in compensatory damages and $62 million in punitive damages in a suit against Johnson & Johnson for causing her cervical cancer.  She died in 2015 after prolonged use of baby powder made by the company.

In its ruling vacating the judgment, the appeals court cited a recent Supreme Court ruling disallowing lawsuits in states where the plaintiff is not a resident and where the injury did not occur.  The plaintiff in this case is from Alabama and sued in Missouri.

“Jim Onder, who is representing many plaintiffs in the lawsuits, has argued that Missouri is a proper jurisdiction because Johnson & Johnson packages and labels some products in Missouri.”  According to the article, most research indicates talc, which is a soft mineral, has a minimum correlation to ovarian cancer.  In other lawsuits, jurors awarded plaintiffs more than $300 million combined, and the company intends to have all these rulings overturned.

Posted by Kayla Caveny.

The United States and Europe both have emissions standards for their vehicles. The standards are in place to limit the amount of pollutants the vehicle may make. However, there is a way to bypass those standards, illegal of course. This certain device is called a “defeat device,” which is any apparatus that unduly reduces the effectiveness of emissions control systems under conditions a vehicle may reasonably be expected to experience.

On September 18, 2015 U.S and European officials accused Volkswagen and Audi of installing these defeat devices within numerous diesel cars made between 2009 and 2015. The U.S. Environmental Protection Agency the cars that were tampered with “included software that circumvents EPA emissions standards for certain air pollutants.” The vehicles that were effected only release the EPA’s emissions standards when the car is actually being tested. The vehicle actually produces nitrogen oxides at up to 40 times the “legal” standard. Because of these vehicles being tampered with over 11 million Volkswagen and Audie’s have now been subject to recall. Volkswagen did admit to not complying with governmental standards. However, the makers of Volkswagen and Audi told the owners of these cars that “this is an emissions issue, your vehicle is safe to drive.”

Volkswagen and Audi’s actions have now caused several lawsuits, especially within the state of Tennessee. Most of these lawsuits are against Volkswagen and many of the dealers within the United States. According to John Willis, a lawsuit in Chattanooga, Tennessee’s Federal Court included seven plaintiffs who sued Volkswagen’s parent company and a Tennessee based dealer for fraudulent concealment and violating Tennessee consumer protection law. They thought they were purchasing “green” vehicles that met or exceeded federal emissions standards.

The plaintiffs believe that once Volkswagen completes a government mandated recall to remove the illegal defeat devices, the cars will not perform as they were designed. In the end Volkswagen has a settlement of 10 billion for vehicle buybacks, lease terminations, and owner compensation, as well as a 2.7 billion dollars towards environmental programs to reduce polluting nitrogen oxides in the atmosphere. Volkswagen must also spend another 2 billion to promote zero-emission vehicles, which is even more than what they had originally planned to spend on the technology.

Kayla is a marketing student at the Stillman School of Business, Seton Hall University, Class of 2019.

References:

http://www.bbc.com/news/business-34324772

http://www.edmunds.com/car-buying/faq-volkswagen-diesel-emissions-settlement.html

Posted by Kayla Caveny.

The United States and Europe both have emissions standards for their vehicles. The standards are in place to limit the amount of pollutants the vehicle may make. However, there is a way to bypass those standards, illegal of course. This certain device is called a “defeat device,” which is any apparatus that unduly reduces the effectiveness of emissions control systems under conditions a vehicle may reasonably be expected to experience.

On September 18, 2015 U.S and European officials accused Volkswagen and Audi of installing these defeat devices within numerous diesel cars made between 2009 and 2015. The U.S. Environmental Protection Agency the cars that were tampered with “included software that circumvents EPA emissions standards for certain air pollutants.” The vehicles that were effected only release the EPA’s emissions standards when the car is actually being tested. The vehicle actually produces nitrogen oxides at up to 40 times the “legal” standard. Because of these vehicles being tampered with over 11 million Volkswagen and Audie’s have now been subject to recall. Volkswagen did admit to not complying with governmental standards. However, the makers of Volkswagen and Audi told the owners of these cars that “this is an emissions issue, your vehicle is safe to drive.”

Volkswagen and Audi’s actions have now caused several lawsuits, especially within the state of Tennessee. Most of these lawsuits are against Volkswagen and many of the dealers within the United States. According to John Willis, a lawsuit in Chattanooga, Tennessee’s Federal Court included seven plaintiffs who sued Volkswagen’s parent company and a Tennessee based dealer for fraudulent concealment and violating Tennessee consumer protection law. They thought they were purchasing “green” vehicles that met or exceeded federal emissions standards.

The plaintiffs believe that once Volkswagen completes a government mandated recall to remove the illegal defeat devices, the cars will not perform as they were designed. In the end Volkswagen has a settlement of 10 billion for vehicle buybacks, lease terminations, and owner compensation, as well as a 2.7 billion dollars towards environmental programs to reduce polluting nitrogen oxides in the atmosphere. Volkswagen must also spend another 2 billion to promote zero-emission vehicles, which is even more than what they had originally planned to spend on the technology.

Kayla is a marketing student at the Stillman School of Business, Seton Hall University, Class of 2019.

References:

http://www.bbc.com/news/business-34324772

http://www.edmunds.com/car-buying/faq-volkswagen-diesel-emissions-settlement.html

Toys R Us entered Chapter 11 recently causing panic among toymakers. The company owes millions to suppliers.

Toys R Us owes $14.06 million to Jakks, which last year posted a profit of $1.2 million, making the California-based toy supplier one of more than 100,000 creditors sideswiped by the toy chain’s bankruptcy in the run-up to the all-important holiday season. In total, Toys R Us owes $7.5 billion to a group that includes virtually every major toymaker in the country: Mattel (owed $136 million), Hasbro ($59 million), Spin Master ($33 million), Lego ($32 million), Radio Flyer ($12 million), Crayola ($2.6 million).

Companies such as Lego, who are working with Toys R Us, expect their own sales to decline. Small “mom and pop” companies that make things like fidget spinners “rely heavily on Toys R Us for visibility and sales, and often spend months customizing items to the retailer’s specifications.” These companies have “little hope” they will receive part of what they are owed.

Toys R Us received “$3.1 billion from JP Morgan and others to help pay for inventory and company investments.” Some suppliers believe the money can help keep the company in business, but others are not so optimistic.