-JUDGE REJECTS CHARGES ON 13 FOR TAX SHELTER -As Good As News is a huge fan of increased IRS enforcement budget and high profile criminal prosecutions for tax evasion. Nothing encourages my voluntary tax compliance like fear of audit, unless it's watching a guy in a suit being dragged off to jail in handcuffs. As Good As News also prepared to accept the unpleasant need to encourage dishonor among thieves to get convictions, the time honored plea deal for Bonnie if she's willing to testify against Clyde. Government's conduct here was somewhat different, prosecutor to KPMG "I will blow your head off unless you hang your employees out to dry". Kudos to Judge Kaplan for making sure it won't happen again. KPMG and employees threatened with indictment for tax evasion. As part of a larger deal, US Attorneys say to KPMG - we won't indict KPMG for now, but if KPMG pays legal costs for your employees who are not cooperating with the prosecution then we will indict KPMG. KPMG is a very big boy, but it also has a business that is totally dependent on reputation and government sanction. KPMG understood just getting indicted would mean death for the firm, even if a trial ultimately established it was not guilty. Arthur Andersen actually won the Enron case, but there was no firm left by the time the final decision was announced. The rules for when a firm can and will defend its employees, and fund defense costs in advance rather than after a verdict, depend on several factors (including laws of the jurisdiction of organization, provisions of constituent documents like charter, by-laws or partnership agreement, employment or severance agreements with legal fee provisions), usually including a determination by the firm that the employee did not knowingly or recklessly commit crimes. The firm does not have to advance defense costs for a renegade employee who acted without authority or approval but they should be able to make that assessment based on the conduct of the employee not the survival of the firm. There is no constitutional right to expensive counsel, but there are other rules governing prosecutorial misconduct and when mere indictment is the death penalty, the prosecutors need to consider the circumstances. Hint to US Attorneys, when it smells like blackmail it is probably a bad idea.
DOW JONES AND MURDOCH CLOSE TO DEAL -Buckle up Wall Street Journal, you are in for a crash course. Forget getting the facts straight with staid, unbiased presentation, and say hello to drill sergeant Bill O'Reilly - you are about to join the fair and balanced world of Fox. "Dow hits record low as losers outnumber winners by 9 to 1" - shape up WSJ, - the new lede is "10% of stocks advance". Most will mourn any shift by WSJ to Fox News approach, but trading rooms everywhere look forward to NY Post style cheesecake on WSJ back page. In describing how he looked for a "franchise" in making investments, something that set an enterprise apart from its competitors, Warren Buffet said "There is no across the street from the Wall Street Journal." Rupert understands he is paying for a global franchise built on a tradition that is totally alien to his existing operations. He's not a hands off kind of guy, but also not a guy who wants to wreck his own investment -As Good As News will stay tuned.