Kidder, Peabody & Co: Creating Elusive Profits

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Case

Reference no. 9-102-S16

Spanish language

Subject category: Finance, Accounting and Control

Authors: Antonio Davila (IESE Business School); Robert L Simons (Harvard Business School)

Published by: Harvard Business Publishing

Originally published in: 1996

Version: 15 October 1999

Length: 22 pages

Data source: Published sources

Topics: Business history; Management; Control systems; Profitability; Fraud; Costing; Equity method; Risk; Risk management; Bonds

Share a link: https://casecent.re/p/98446

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Abstract

This is a Spanish version. On April 17, 1994, Kidder, Peabody & Co announced a $350 million charge against earnings resulting from the discovery of false trading profits. That same day, the termination of Joseph Jett's employment with the company was made public. By illustrating the mechanics of bond accounting, this case describes the trading strategy that led to the creation of false profits. Failures of internal control are also discussed. The case ends by asking who was to blame.

Location:

United States

Other setting(s):

1991-1994