"Waste Management Inc. [WMI] former Chief Financial Officer James E. Koenig will have to pay more than $4 million in disgorgement, prejudment interest and civil penalties, according to the final judgment entered against him in a high-profile corporate-fraud case. ... [WMI] restated its earnings by $1.7 billion in 1997 after new mangement took over. The restatement caused a $6 billion decline in the value of company shares", WSJ, 4 January 2008.
$6.7 million? That's 10% of Lloyd Blankfein's $67.9 million 2007 bonus, see my 21 December 2007 post. Therefore I advocate our (In)Justice Department adopt a new test to determine when it will forgo prosecuting a securities fraud case. My new test is simpler than a balancing test judges use when deciding to admit evidence, i.e., does the "prejudice exceed the probative value"? It's the Blankfein test: does the fraud involve at least $6.8 million? If not, decline prosecution. Hey Mike Garcia (MG), how about it? Dismiss the charges against the "Goldman Sachs two". Free the Goldman Sachs two! Hey MG, write up the Blankfein test and try to have it inserted in the US Attorneys' Manual. Why not?
$4 million in disgorgement for engaging in a scheme which overstated WMI's earnings by $1.7 billion? I invoke the spirit of Jesse Jackson again, see my 31 October 2007 post.