Fraud always spikes during frothy markets. If it feels like we are beating you over the head as it relates to Quality CEOs and CEO Integrity it is because we are. High Quality, High Integrity CEOs are the best preventive measure against getting burned by fraudulent companies.
2020 has delivered massive equity market valuation froth (thank the merged Treasury and Federal Reserve) which has engendered the usual suspects that occur during bubble times such as record SPAC activity, record retail trading activity, valuations based on everything but the fundamentals and our favorite – fraud. Here are a few fraud-related items from this year:
- Wirecard and 2B EUR of missing cash: Read More.
- Nikola Motors’ (tkr: NKLA) founder and fraud claims: Read More.
- General Electric (tkr: GE) served with a Wells notice: Read More.
- New to the list as of October 15th – Reynolds and Reynolds CEO Robert T. Brockman: (Read More). Mr. Brockman was accused of using a charitable trust and other offshore entities to hide approximately $2 billion from the IRS over 20 years while failing to pay taxes. Brockman was also charged with money laundering and other crimes. Government officials describe the case as the largest criminal case ever against a person accused of tax evasion. Brockman is the initial backer of Vista Equity whose founder Robert Smith recently settled with the DOJ for $140 million.
When we announce CEORater’s inaugural class of CEO inductees into the CEO Hall of Fame later this year there may be certain names missing from the inductee list that one may expect to see. Personal Integrity and Character are two attributes that we consider when evaluating CEOs. Thus, if a particular CEO leads a market leading or disruptive Technology company yet is lacking in these two areas or is generally weak in the Corporate Governance area, we would not induct such a CEO into the CEORater CEO Hall of Fame.