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Corporate Compliance in a Trump World


Speaker(s): Michelle DiGruttolo, Randall Cook, Steven E. Richards, Timothy Smith
Recorded on: Apr. 5, 2017
PLI Program #: 212144

Steven E. Richards is a Senior Managing Director at Ankura Consulting Group, located in the Washington, DC office. He has over 20 years of experience involving internal and forensic accounting investigations and analysis, issues surrounding Generally Accepted Accounting Principles (GAAP) and auditing matters. He has extensive litigation consulting, complex data analysis, forensic accounting, and auditing expertise. Prior to joining Ankura, Mr. Richards was a Partner at Deloitte LLP in the Forensic Advisory practice as well as a Senior Advisory Partner to Deloitte Leadership and Office of General Counsel relating to Audit Regulation and Public Policy. He has served as a regulator at both the US Securities and Exchange Commission (SEC) and the Public Company Accounting Oversight Board (PCAOB), where he was a Special Advisor to the Chairman and Senior Advisor to the Director of the Division of Enforcement and Investigations.

Before joining the PCAOB, Mr. Richards was a Managing Director at FTI Consulting, Inc. (FTI), where among other high-profile investigations, he managed a multidisciplinary investigative team of professionals and forensic accountants in support of the Securities Investor Protection Act Trustee and his counsel on the seminal Bernard L. Madoff Investment Securities matter. Prior to this role, Mr. Richards was an Assistant Chief Accountant in the SEC’s Enforcement Division, where he performed numerous financial and accounting fraud investigations involving SEC registrant’s senior executives, external auditors, and other third parties. He has deep expertise with respect to actions brought against accounting and auditing professionals pursuant to both SEC and PCAOB rules. Before joining the SEC, Mr. Richards was a Manager with FTI where, among other investigations, he managed a forensic accounting investigation team in a nine-month investigation of accounting and reporting issues at Freddie Mac. Prior to this role, he was an auditor with Arthur Andersen LLP.

During the course of his work, Mr. Richards has appeared before the US Senate Committee on Banking, Housing, and Urban Affairs; US House Committee on Financial Services; SEC; Federal Bureau of Investigations; US District Attorney’s Office, and the Office of Federal Housing Enterprise Oversight (OFHEO). He also has worked with regulators from the PCAOB, SEC, Commodities Future Trading Commission, Financial Industry Regulatory Authority, Ontario Securities Commission, and the Royal Canadian Mounted Police.

Mr. Richards has assisted in a variety of investigations, working with both internal and outside counsel in representing Boards of Directors, Special Committees, and senior management. These complex investigations have involved financial restatements, Section 10A examinations, and whistleblower allegations regarding revenue recognition (including premature revenue recognition practices such as revenue recognition where risk of loss had not passed to the customer, channel stuffing and bill & hold transactions), derivative financial instruments, securitizations, vendor allowances, inventory accounting, as well as other issues around the interpretation and application of GAAP.

Mr. Richards excels in assisting counsel in interpreting and communicating the results of investigations to regulators, with a particular focus on simplifying the technical aspects of accounting and auditing and presenting them in understandable terms.

Mr. Richards Experience includes

Public Sector

  • Advisor to the PCAOB’s Director of the Division of Enforcement and Investigations, advised on all aspects of policy and operations for the Enforcement program, including coordination with other domestic financial regulators, Division-wide initiatives, and Division priorities.
  • Advisor to the PCAOB Chairman on policy and operations for all aspects of PCAOB oversight, including the Enforcement program, adjudication proceedings, standard setting, evolution of the domestic and international inspections program, development of the broker-dealer inspection program, and risk analysis.
  • Assistant Chief Accountant—US Securities and Exchange Commission, Division of Enforcement
  • Led the accounting and auditing aspects of regulatory investigations into possible violations of the federal securities laws at several Fortune 100 companies, which led to fraud charges and nearly $500 million in sanctions to be returned to investors.
  • Identified multiple financial statement errors related to accounting for derivatives and revenue recognition that led to restatement and several financial reporting revisions at a “Dow 30” issuer, culminating in accounting fraud charges and a $50 million settlement.
  • Led all financial reporting and accounting elements of the investigation into financial irregularities in a Fortune 50 financial institution’s accounting for derivative financial instruments under FAS 133, resulting in a restatement of its hedge accounting and reduced previously reported net income by more than $11 billion, culminating in accounting fraud charges and a $400 million settlement.
  • Conducted investigation into revenue recognition, including channel stuffing, bill & hold transactions, among other premature revenue recognition practices, as well as “cookie jar” reserve issues, including GAAP and Financial Statement Disclosure analysis, at one of the largest public issuers in Canada. The investigation culminated in accounting fraud charges and a $35 million settlement.
  • Led all financial reporting and accounting elements of an investigation into violations antifraud, periodic reporting, record keeping, internal controls, and lying to the auditors provision to the federal securities laws for premature revenue recognition practices at a manufacturer and distributor of parts and accessories for mobile technology products. The investigation led to fraud charges against the Chief Executive Officer, Chief Financial Officer and Vice President of Sales.
  • Oversaw numerous investigations into possible violations of auditing standards at several multinational audit firms.
  • Assisted in the coordinated of multi-jurisdictional investigations with both domestic (Department of Justice, Public Company Accounting Oversight Board and U.S. Attorney Office) and foreign financial regulators including the Ontario Securities Commission, and the Royal Canadian Mounted Police. 

Private Sector

  • Advisor to Deloitte Touché Tohmatsu Limited’s (“Deloitte Global”) Regulatory and Office of General Counsel advising on aspects of Government, Regulatory and Professional Matters involving the audit practice. In this role, he advised on audit regulatory issues involving public policy, inspection, standards, rules, litigation and enforcement matters involving the PCAOB, SEC and other foreign audit and securities regulators.
  • Advisor to Deloitte and Touché LLP’s (“Deloitte US”) Regulatory and Office of General Counsel advising on aspects of Government, Regulatory and Professional Matters involving the audit practice. In this role, he advised on audit regulatory issues involving public policy, inspection, standards, rules, litigation and enforcement matters involving the PCAOB, SEC and other foreign audit and securities regulators.
  • Led a team of more than 20 forensic professionals in an internal investigation into a large public pharmaceutical company relating to allegations of undisclosed relationships, financial reporting and disclosure violations and the use of an undisclosed affiliate to accelerate revenue recognition. Investigation led to restatement of financial statements and replacement of three executives.
  • Assisted counsel in the representation of a public global manufacturer and marketer of colors, flavors and fragrances in an SEC enforcement inquiry relating to the accounting and disclosure of restructuring cost and non-GAAP measures.
  • Assisted counsel in the representation of a Chief Executive Officer of a technology and data measurement company related to whistleblower allegations around accounting and disclosure issues.
  • Managed a multidisciplinary investigation team retained by the Securities Investor Protection Act Trustee for the global liquidation of Bernard L. Madoff Investment Securities LLC, one of the largest financial frauds in US history. Oversaw the forensic investigation and data analysis work streams, including the supervision of forensic accountants, economists, market structure experts, and data analysts.
  • Led a team of forensic professionals that conducted an internal investigation into a public water purification company relating to potential fraudulent revenue recognition and variable-interest entities. Investigation led to restatement of financial statements and a subsequent SEC enforcement action against the company and two executives.
  • Led a team of forensic professionals in an internal investigation into a public animal health products and pharmaceutical company relating to irregularities in revenue recognition, including allegations of channel stuffing and bill & hold transactions. Investigation led to a restatement of financial statements and a subsequent SEC enforcement action against the company and five executives.
  • Led a team of more than 15 professionals in a nine-month investigation of accounting and reporting issues at Freddie Mac relating to derivatives, securitizations, and other structured financial instruments.
  • Briefed the staff of governmental entities investigating Freddie Mac, including the US Senate Committee on Banking, Housing, and Urban Affairs; US House Committee on Financial Services; OFHEO, and the SEC.
  • Led an internal investigation into a public issuer body armor manufacturer on behalf of the audit committee focused on the existence of undisclosed personal expenses of senior management, revenue recognition, and related-party loan transactions.
  • Led internal investigation, on behalf of Reinsurance Company, into $80 million fraud relating to misappropriated policy premiums by sub-insurer. The investigation involved tracing significant flows of funds among many different financial institutions and related entities. Conducted briefings for the Federal Bureau of Investigations and other law enforcement agencies on findings, which assisted in to the conviction of the principal of the sub-insurer and identification of funds for recovery.
  • Provided accounting and auditing services to clients operating in a wide range of industries, including technology, hospitality, and manufacturing.
  • Researched and resolved a broad range of complex accounting, auditing, and financial reporting issues. Developed expert knowledge of GAAP accounting and reporting, SEC reporting, PCAOB rules and standards, Generally Accepted Auditing Standards, and internal controls analysis.

EDUCATION

BA, Accounting, Washington & Jefferson College

CERTIFICATIONS

Certified Public Accountant  

PROFESSIONAL ASSOCIATIONS

American Institute of Certified Public Accountants

Pennsylvania Institute of Certified Public Accountants

Association of Securities and Exchange Commission Alumni


Randall H. Cook is a Senior Managing Director at Ankura based in New York. He has more than 20 years of experience leading and advising organizations engaged with critical operational and compliance challenges; conducting complex investigations and audits; and designing and delivering high-performance, persistent risk mitigation solutions. Randy assists organizations to navigate complex risks arising from national  security  concerns  (including  the  Committee  on  Foreign Investments in the US (CFIUS) and US trade controls); government and regulatory investigations and audits; and public and fiscal integrity issues.

Prior to joining Ankura, Randy was Senior Counsel for two Fortune 50 aerospace technology companies, where he built and led global investigations and compliance programs focused on consistent, process- based risk analysis, engagement, and mitigation. These programs were a critical enabler for the companies’ successful navigation of consent agreements with the US Department of State.

Randy was also an Assistant United States Attorney in the federal district of New Jersey, where he prosecuted numerous complex crimes while serving as the Anti-Money Laundering District Coordinator for the Organized Crime and Drug Enforcement Task Force and as District Coordinator for Counterproliferation Initiatives. In addition to this, as an attorney for Covington & Burling LLP in Washington, DC, he provided counsel and advocated for clients confronting complex regulatory issues in multiple industries.

Education

  • JD, Duke University School of Law
  • MA, International Relations, Duke University
  • BSFS, Georgetown University

Certifications

SCCE Certified Compliance and Ethics Professional (CCEP)

Affiliations

  • American Bar Association Bar Admissions: CT, NJ, NY
  • Society for International Affairs
  • International Association of Independent Private Sector Inspectors General, Member


Timothy Smith is a Senior Managing Director of Ankura Consulting Group in Dallas, where he manages the firm’s healthcare valuation practice. With over two decades of experience in the healthcare industry, Tim is a nationally recognized thought leader in the area of healthcare compensation valuation and a frequent speaker on healthcare valuation topics at leading industry conferences. His key area of expertise is valuation for healthcare regulatory compliance purposes.

Mr. Smith has been a practicing professional appraiser specializing in the healthcare industry since 2008. His experience in healthcare valuation includes the appraisal disciplines of compensation and business valuation. Mr. Smith’s compensation valuation practice focuses on physician compensation for clinical services, medical directorships, call coverage, administrative, and executive services. It also encompasses various forms of management services arrangements. His business valuation experience covers a broad range of healthcare provider entities with a focus on the pre-transactional determination of fair market value for regulatory compliance purposes.

Prior to 2008, Mr. Smith’s healthcare industry experience included more than 14 years with HCA (Hospital Corporation of America), where he designed and managed HCA’s fair market value compliance program for outside appraisals as part of the company’s corporate integrity agreement. During his tenure at HCA, he reviewed hundreds of business and compensation appraisals with a focus on healthcare regulatory compliance. He also negotiated physician practice acquisition and divestiture transactions and served as an ethics and compliance officer.

Mr. Smith’s experience prior to working the healthcare industry included working as a general accounting manager for Hitachi Computer Products, a technology manufacturing company. He began his career as a staff auditor with Arthur Andersen & Company.

Mr. Smith is the coeditor of the BVR/AHLA Guide to Healthcare Industry Compensation and Valuation, the industry’s leading textbook on healthcare compensation valuation. He served as the co-chair of 2014 Advanced Healthcare Valuation and Consulting Symposium sponsored by the National Association of Certified Valuators and Analysts and the Consultants’ Training Institute (NACVA/CTI). Mr. Smith also served on the planning and teaching committee for the NACVA/CTI healthcare consulting workshop.

EDUCATION

BBA, Accounting, University of Oklahoma

CERTIFICATIONS

Accredited in Business Valuation – AICPA

Certified Public Accountant – States of Oklahoma and Texas*

PROFESSIONAL ASSOCIATIONS

American Institute of Certified Public Accountants

American Health Lawyers Association

Health Care Compliance Association

Medical Group Management Association

 

* Ankura Consulting is not a CPA firm