Cms Energy Scandal and Rebound Essay
Round Trip Trades
Round trip or wash trades are simultaneous, …show more content…
In 2002 management admitted that CMS Energy booked $4.4 billion in round-trip trades and inflated its revenue by as much. The company's stock price dropped by more than 50 percent over the past year and in May 2002, CMS Energy's CEO resigned.
Preston D. Hopper, CMS's former chief accounting officer was fired, and Tamela C. Pallas, former chief executive of CMS Houston-based trading subsidiary resigned from CMS with a lucrative $2,028,000 termination contract. Pallas¡¦ contract leaves doubt in that the company did not have knowledge of the round trip trades. I believe that CMS was afraid that Pallas would implicate others, including members of the Board of Directors. It would be impossible to conduct damage control if the public new that the company was allowed the trades to take place. The company would have no scapegoat and would have a difficult time turning things around. I believe that the board of directors where aware of the round trip trades and approved of it or they would not have given a lucrative termination contract. Pallas took the money and became the scapegoat the company needed.
May 24, 2002 CMS Energy Corporation Board of