It is easier for a former auditor to conceal fraudulent activities because he or she knows what the independent auditors will be looking for.
The parties agree, in substance, as to the legal standards defining materiality, scienter and loss causation. The inclusion of consigned merchandise in year-end inventory.
The court further explained that: Because auditors assigned to inventory were often young men in the s, many more males entered the accounting and auditing profession than femalesSam always assigned very attractive young women to assist the auditors in the inventory count.
Lucia Medical School" was materially misleading. See State Teachers Retirement Bd. Assuming plaintiffs could show that the Underwriters placed too much reliance on comfort letters and failed to conduct its own inquiries, the court concludes such a showing does not establish that the Underwriters acted with intent to deceive or in deliberate disregard of fraudulent conduct.
Rule 10b-5, promulgated under that section prohibits, in addition to nondisclosure and misrepresentation, any "artifice to defraud" or any act "which operates or would operate as a fraud or deceit.
Moreover, many or most institutional investors may have known or assumed that Crazy Eddie employed unethical or illegal sales practices. Remember, you cannot put large amounts of cash into the bank without the bank notifying the IRS.
This process was repeated several times. Convertible subordinated debentures only had a balance init was at Antar has testified that he informed the Underwriters of these two developments.
Crazy Eddie is not generating very much profit from its assets. Discuss the pros and cons of this practice. Further, the following yearMain Hurdman merged with Peat Marwick, and new auditors were part of the engagement team. Antar, Crazy Eddie failed to disclose in the March prospectus several loans from Crazy Eddie to certain of its officers.
I The critical facts may be quickly summarized.
In the case of Crazy Eddie, the case tells us that he was overstating inventory; thereby increasing profits at the cost of lowering inventory turnover. A low inventory turnover is indicative of a couple of possibilities; the first being that the company is simply inefficient, and has a weak sales department.
Some investors may have been reluctant to purchase shares in a "schlock operation. In order to establish loss causation, a plaintiff must prove that the damage suffered was a foreseeable consequence of the misleading disclosure.
For liabilities; short-term debt increased from. They are not correct. Their intention is to lower audit service fees and recuperate by offering non-audit services to client. Moreover, it had represented in the March prospectus that it would only make loans to officers under restricted circumstances and would report all such loans to stockholders.
Moreover, plaintiffs have made no argument suggesting that their losses can be attributed to the misrepresentation of such loans in the prospectus. Inventory turnover has steadily decreased over the reported four years.Demand for Crazy Eddie shares was so high that we were able to sell million shares ormore than anticipated at $ per share and raise $ million in fresh capital.
Eddie and his father Sam M. Antar soldshares orshares more than anticipated and pocketed $ million in proceeds. CASE Crazy Eddie, Inc. In ,Eddie Antar, a year-old high school dropout from Brooklyn, opened a consumer electronics store with square feet of floor space in New York City 1 Despite this modest beginning, Antar would eventually dominate the retail consumer electronics market in the New York City metropolitan area.
View Notes - 1 8 Crazy Eddie from ACCT at Queens College, CUNY. Emilia Skupiewska-Drozd Acct. Prof. A.
Dignam Case Crazy Eddie Inc. Question 1. Key Ratios for Crazy Eddie: Liquidity%(23). The cons are the negative light and question the independence of the audit firm. The person may have extensive knowledge how to deceive and commit unethical transactions without his former employer knowing. Facts Crazy Eddie Case Questions 1.
Compute key ratios and other financial measures for Crazy Eddie during the period Top Questions No one has asked a question yet! Be the first! Crazy Eddie Reviews (0) Q&A (0) Leave a Review Ask A Question.
REVIEWS Be the first to review this item! Start your review of Crazy Eddie! How would you rate this product? e d c b a. Did you forget to choose a rating for your review? + Product + Photo. In Re Crazy Eddie Securities Litigation, F.
Supp. (E.D.N.Y. ) case opinion from the U.S. District Court for the Eastern District of New York.Download