News Category: News

Matters that Matter

StoneTurn had the privilege to work on a wide range of matters in 2016―our most successful year to date. In 2016: A Year in Review, we share some notable stories across various industries, types of work and venues.

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Christopher Martinez Elected Managing Partner and Simon Platt named Chairman and Sean Tuttle Admitted to the Partnership

Boston, MA (January 11, 2017) – StoneTurn, a forensic accounting and expert services firm, today announced that Christopher Martinez has been elected Managing Partner, taking over from Simon Platt who has held the role since the firm’s founding in 2004. Simon has been appointed Chairman, where he will continue to work with the firm’s largest clients and be involved in a number of its high-stakes engagements. Additionally, Sean Tuttle has been admitted as Partner.

“Having worked with Christopher since the very first days of our firm, I am confident that his leadership will bring continued success. The addition of Sean and Neil to the partnership is a testament to our commitment to strategic growth and to develop our professionals from within. I and the entire Partner Group congratulate Christopher, Sean and Neil,” Simon said.

Over the past 13 years, StoneTurn has steadily grown across the U.S. and in London to better serve attorneys, corporations and regulators on a range of litigation and compliance issues.

Simon has led and been involved in many accounting and financial disclosure-related investigations on behalf of Audit and Special Committees of Boards of Directors over the course of his more than three-decade career. He has also testified in Federal and State courts and at arbitrations, assisted in mediations and acted as an independent, neutral arbitrator in accounting-related matters. His engagements include numerous expert testimony and non-testifying consulting roles. He is a Fellow of the Institute of Chartered Accountants in England & Wales, and a Certified Public Accountant in Massachusetts and New York.

Christopher has more than 25 years of experience in intellectual property (“IP”) damages quantification, intellectual asset licensing and complex financial modeling. He advises companies on the valuation, commercialization, licensing and management of intellectual assets. As a former licensing executive of a Fortune 50 enterprise, Christopher applies a unique and experience-based approach to the quantification of patent, trademark and copyright infringement damages, as well as trade secret misappropriation damages. Intellectual Asset Management has consistently named Christopher among top economic experts.

As head of the firm’s Forensic Technology Practice based in Boston, Sean focuses on managing investigations and litigation matters involving technology as a principal component. He has worked with leading New England, New York, and national law firms and corporations to provide technical services on highly sensitive matters, including electronic discovery, forensic evidence collection, computer forensics, e-mail, and backup media analysis and restoration. Sean is an EnCase Certified Examiner.

About StoneTurn

StoneTurn provides forensic accounting, corporate compliance and expert services to attorneys, corporations and government agencies on a range of high-stakes legal and risk-related issues.

StoneTurn was founded in 2004, on the premise of meeting clients’ demand for experts who value collaboration, prefer hands-on client service, and invest in long-term, trusted relationships. Our team includes former international public accounting firm partners, attorneys, and public and private sector alumni.

With professionals located in offices across the U.S. and U.K., and a network of senior advisers in numerous other countries, we provide expertise in: Litigation, Investigations, Compliance & Monitoring, Valuation, Forensic Technology and Data Analytics.

David Stern, a Partner in StoneTurn’s London office, has been recognized among leading Expert Witnesses in Arbitration by Who’s Who Legal.

David is regarded as “great to work with, effective and insightful.” See David’s profile.

To learn more, visit WhosWhoLegal.com

StoneTurn recently gathered a panel of U.S. Securities and Exchange Commission (“SEC”) Division of Enforcement alumni in Chicago to discuss current trends with regard to the agency’s activity. The discussion centered on the SEC’s recent announcement that it had broken its own record for the number of enforcement cases brought, marking the third year in a row it filed an increasing number of cases. As the annual financial reporting deadline approaches, the speakers offered best practices for attorneys, audit committee and board members, corporate executives and compliance professionals to consider as they head into year-end.

Here are the top five takeaways from the discussion:                                         

1. In the absence of wide-scale accounting fraud, the SEC has been pursuing less serious “violations ” cases. An increased emphasis on the effectiveness of internal controls is needed.

While there was a growth in case activity, the amount of collections is actually less this year than it was last year. The SEC has been using a “broken windows” approach in pursuing ground level offenses, which could eventually become larger frauds. Additionally, the SEC has been pushing for more settlements; for example, there have been a number of cases involving potentially much larger penalties that were reduced to settle quickly. The SEC is negotiating hard to close small cases, which has resulted in the number of overall cases increasing, although, the amount of collections has decreased.

From an accounting perspective, there has been an increased emphasis on internal controls. This is largely due to the decrease in the number of accounting frauds, as there haven’t been cases similar to Enron or Worldcom over the past decade. In the absence of a large number of fraud cases, the SEC is now looking at non-fraud and internal controls.

2. There are more specialists in the SEC than ever before.

Over the past six years, specialized units have been formed. In particular, the asset management unit is one of the largest. In late 2013, the Fraud and Audit Task Force was created to be more proactive about identifying accounting abuses and trends to pursue. This helps to generate leads, investigations and cases. Furthermore, the SEC has become much more coordinated internally, as well as with other regulatory agencies, which is a factor in the higher enforcement statistics.

3. A prosecutorial mindset is driving enforcement actions.

While increased coordination has certainly been a factor in increasing enforcement numbers, it is not the only cause. The current SEC Division of Enforcement has become much more prosecutorial in mindset, as it now employs many more former criminal prosecutors than ever. It is increasingly acting more like the U.S. Department of Justice (“DOJ”), and pursuing charges more aggressively.

In particular, the Whistleblower program has become an active part of how the SEC pursues cases, and many are related to the Foreign Corrupt Practices Act (“FCPA”).  However, whistleblower claims occur across the board. Some claims allege fraud, while others are just the sour grapes of a disgruntled employee. As far as accounting fraud, it depends heavily on the whistleblower program and restatements—i.e., identifying accounting fraud from afar is difficult, despite continuing efforts to become more proactive and the increasing use of data analytics.

4. The role of the gatekeeper is more critical now.

From an SEC perspective, gatekeepers are primary targets. Typically, these include audit committee members, CEOs and CFOs, CAOs and independent auditors. There are two tracks the SEC uses to investigate financial reporting matters. One is to go after companies and their employees for cooking the books and internal control failures; the other is to assess the quality of the independent audit and look to see if auditors failed to comply with applicable PCAOB auditing standards.

While the SEC is trying to incentivize Chief Compliance Officers (“CCOs”) to be proactive, its recent actions have created an atmosphere in which almost anyone who tries to improve internal controls can be investigated and potentially charged with an internal controls violation.

As a result, it is important for companies and audit firms to document what was known, when they learned of it and what they did about it. A good way to think about it is:

• Identify the issue
• Bring in appropriate in-house personnel to assess
• Consider external counsel and consultants for potential securities laws violations
• Develop a plan to address the issue
• Put resources against it
• Fix and address the issue
• Create memos backing up everything done—facts, analysis, materiality, conclusions, etc.

Most importantly, be reasonable and proactive when communicating with the independent auditors and SEC.

5. Document, document, document.

If a red flag comes your way, all is not lost. Appropriately follow-up as described above—document, document, document—and it is best to do so before you receive an SEC document request or are examined (e.g., by OCIE). It is harder for the SEC to develop a case against you when you can demonstrate that you have considered the relevant issues, have exercised reasonable judgment and have appropriately documented conclusions. In the absence of documentation, it is much easier for the SEC to challenge your process, controls and good-faith and, even if no fraud is evident, to convert the prosecution to a controls case.

In the case of self-reporting, the decision whether or not to self-report must be made at a very senior level and with the assistance of inside and external counsel. If you decide not to self-report, it is best to have documented your rational and efforts to remediate or enhance controls.

Reporting concerning internal controls is also imperative. If there is a 404 report citing effective controls and then a restatement occurs, the SEC may assess whether a material weakness should have been reported earlier and whether the severity of deficiencies was previously understated. Nowadays, the SEC is going to go back and take a much closer look at things like this.  They are also taking a closer look at whether contingencies and reserves were recorded in a timely manner and at appropriate amounts.

Ultimately, with the SEC prosecutors evaluating things in hindsight, there is always skepticism on their part when companies and auditors are not able to say they addressed the issues in real time, so it’s good to ensure there is plenty of accurate documentation when things do arise.

Update: Given the pending Administration change with the election results on November 8 (one day after the panel), uncertainty exists regarding the direction the SEC’s focus or priorities may take.

A sincere thank you to our panelists for their participation:

• James Lundy, former Senior Trial Counsel and Senior Regulatory Counsel, SEC Division of Enforcement and Office of Compliance Inspections and Examinations, and Partner with Drinker, Biddle & Reath
• Pravin Rao, former Branch Chief, SEC Division of Enforcement, and Partner with Perkins Coie
• Howard Scheck, former Chief Accountant, SEC Division of Enforcement, and Partner with StoneTurn
• Junaid Zubairi, former Senior Attorney, SEC Division of Enforcement, and Partner with Vedder Price

Increasingly, corporate compliance monitors are being asked to assess an organization’s culture of integrity as part of their efforts to fight fraud and misconduct.

Jonny Frank, a Partner at StoneTurn, recently spoke with Compliance & Ethics Professional for his views on compliance and business ethics monitorships and the growing role of a strong corporate culture.

Read the full inteview.

Firm Continues to Strengthen Forensic Accounting Expertise in Response to Heightened Regulatory Enforcement Actions

Washington, DC (October 11, 2016) – StoneTurn, a forensic accounting and expert services firm, today announced that experienced forensic accountant Howard Scheck has joined as a Partner based in the firm’s Washington, DC office.

Having previously held positions as Chief Accountant of the U.S. Securities and Exchange Commission’s Division of Enforcement and Partner in the Forensic practice of KPMG, Howard brings more than 25 years of experience in investigating financial reporting matters. He specializes in assisting counsel representing audit committees, public companies and audit firms in investigating accounting and auditing issues in response to SEC enforcement inquiries, internal whistleblower complaints and class action lawsuits. 

“Corporations and gatekeepers, including auditors, are facing inquiries and increasing enforcement actions from regulators,” said Simon Platt, StoneTurn co-founder and Managing Partner. “As we are deep in the trenches working with companies and their counsel on these matters, Howard’s knowledge, leadership and hands-on experience is tremendously valuable. We are excited for him to join our growing team.”

Over the course of his career, Howard has conducted numerous financial reporting investigations involving a multitude of accounting, internal controls, disclosure and auditing-related issues involving public companies (and audit firms) across many industries, including energy, financial services, pharmaceutical and telecommunications. In the private sector, Howard has led accounting and FCPA-related investigations for audit and special committees, has assisted counsel in defending public companies, their officers, directors and auditors involved in government investigations, and has assisted companies with assessing and enhancing anti-fraud and FCPA compliance programs and controls.

As the Chief Accountant in Enforcement, Howard oversaw the SEC’s accounting and auditing-related investigations and worked closely with the Office of the Chief Accountant and Division of Corporation Finance on such matters. As a SEC Branch Chief and enforcement attorney, he investigated accounting, FCPA, insider trading, market manipulation and offering fraud cases.

Prior to joining the SEC as Chief Accountant, Howard was a partner in the Forensic practice of another large public accounting firm and, earlier in his career, served in the audit practice for that firm.

Howard is a Certified Public Accountant, and a member of District of Columbia Bar and the American Institute of Certified Public Accountants.

About StoneTurn

StoneTurn provides forensic accounting, corporate compliance and expert services to attorneys, corporations and government agencies on a range of high-stakes legal and risk-related issues.

StoneTurn was founded in 2004, on the premise of meeting clients’ demand for experts who value collaboration, prefer hands-on client service, and invest in long-term, trusted relationships. Our team includes former international public accounting firm partners, attorneys, and public and private sector alumni.

With professionals located in offices across the U.S. and U.K., and a network of senior advisers in numerous other countries, we provide expertise in: Litigation, Investigations, Compliance & Monitoring, Valuation, Forensic Technology and Data Analytics.

The FBI estimates that “business e-mail compromise” scams cost companies $3.1B globally. A new AICPA report warns accountants who work with foreign suppliers and execute wire transfers to foreign banks about the pitfalls of trusting e-mails that are designed to look as though they are sent from company executives.

In light of the AICPA report, Bloomberg BNA asked StoneTurn’s Simon Platt to comment on the importance of policies and compliance programs to train employees on how to appropriately respond.

Read the full article: “Email Impersonation Scams Costing Billions, AICPA Warns.”

StoneTurn is pleased to announce that Alan Ratliff, Ambreen Salters and Christopher Martinez have been recognized as top patent damages experts in the U.S.

Over a period of five months, Intellectual Asset Management (IAM) interviewed hundreds of attorneys, patent attorneys and in-house counsel across the country to compile the 2016 IAM Patent 1000 — The World’s Leading Patent Practitioners. Each of the experts listed received sufficient positive feedback from peers and clients with knowledge of their practice and the market in which they operate to qualify for the recognition. Twenty-three experts were recognized as Highly Recommended, including Alan, while Ambreen and Christopher were recognized among Recommended experts.

According to IAM’s 2016 Patent 1000:

Forensic accounting, economics and valuation expert Alan Ratliff has some unique credentials. Prior to joining StoneTurn Group and establishing the firm’s Houston base, he was a public accountant and, preceding that, a litigator at a top global law firm. “He knows how to present damages arguments in a rational way that lay people can understand and resonates with juries.”

For more information on the IAM Patent1000 and to view the complete list of experts, visit: Best Patent Damages Experts

April 11, 2016 – StoneTurn is pleased to announce that Xavier Oustalniol has joined the firm as a Partner in San Francisco. Xavier brings more than 25 years of experience as a forensic accountant, auditor and litigation consultant, and assists clients on complex forensic accounting issues, fraud investigations, fraud prevention, forensic due diligence and anti-corruption compliance assessments.

Catherine Connolly, a Partner in StoneTurn’s San Francisco office, said, “Xavier’s expertise in complex business litigation matters and corporate investigations, as well as his extensive industry knowledge, will certainly benefit our clients as we continue to expand the scope of our offerings and grow StoneTurn’s presence in the Bay Area. Xavier and I have known one another since our days at Deloitte, and I’m thrilled to team up with him again.”

Xavier has led numerous engagements involving fraud investigations, securities litigation, damages analysis, international arbitration, accountant malpractice and purchase price disputes. In addition, he has extensive experience advising creditors, debtors and trustees in bankruptcy litigation, and on accounting matters in which fraud is suspected and litigation is involved.

He has testified as an accounting expert on the application of generally accepted accounting principles and other financial issues at trial in Federal Court, deposition and in arbitration. Xavier’s industry experience ranges from financial services institutions such as hedge funds, banks, insurance companies, investment companies and securities broker / dealers, to the aviation, real estate, technology, energy, automotive, luxury apparel, telecommunications, professional services, consumer products, agricultural, and manufacturing sectors.

Most recently, Xavier was a Managing Director with Alvarez & Marsal Global Forensic and Dispute Services, where he established the practice in San Francisco. Previously, he was with two other global professional services firms. He began his career as an auditor with Deloitte.

Simon Platt, StoneTurn’s Managing Partner, said, “I am delighted to welcome Xavier to StoneTurn. Not only does his deep expertise expand our firm’s offerings on the West Coast, Xavier is also a wonderful addition to our senior leadership team.”

 

 

2015: A YEAR IN REVIEW

StoneTurn Group had the great privilege to work with clients — many long-standing relationships and numerous new ones — on a range of high-stakes matters last year.

In 2015: A Year in Review, we provide just a few examples of how our professionals continue to bring a focus on quality and a creative, collaborative approach to meet your toughest challenges.

Read more.