Replies to post #125700 on Plastic2Oil Inc (PTOI)

[Johnik]

Well I did get a good chuckle out of your post anyway. That was a very clever spin you put on my words, but that's okay, I'm used to that. Whether it was an intentional spin or an unintentional one (and thus a misunderstanding), I really don't know. But those who are familiar with my comments know I was not accusing the company of fraudulent financial reporting.

From your post:

I was an accountant in a corporate environment for a good piece of my working life and never heard the phrase "accounting irregularity". Thank goodness. Frankly I don't believe that it is a term that gets a lot of use. However:
"American Institute of Certified Public Accountants (“AICPA”) Statement on Auditing Standards (“SAS”) No. 53, The Auditor’s Responsibility to Detect and Report Errors and Irregularities, and AICPA SAS No. 82, Consideration of Fraud in a Financial StatementAudit, both define an “accounting irregularity” as:
“[I]ntentional misstatements or omissions of amounts or disclosures in financial statements. Irregularities include fraudulent financial reporting undertaken to render financial statements misleading ….”
http://10b5.pwc.com/PDF/RESTATEMENT_RESTATEMENT.PDF

We are now in general agreement on both the law and the facts.
I, too, believe that items 1,2,3 and 5 represent intentional misstatements or omissions of amounts or disclosures in financial statements and fraudulent financial reporting undertaken to render financial statements misleading. Item 4 may have contributed to same, but it is a separate and distinct allegation.

Yes, I characterized the allegations set forth in Paragraph 9 of the complaint as accounting irregularities. I did so to make the point that the same legal principles applicable to securities fraud class actions based on GAAP violations also apply to such actions based on other accounting problems (whether characterized as accounting irregularities, accounting problems, accounting errors, accounting deficiencies, or even accounting "goofs"). I find it rather curious that you chose to incorporate a definition of my chosen phrase that is found in a document that I did not even reference in order to warp the meaning of my post (hopefully unintentionally). Further, it is not just me that uses the term when analyzing a plaintiff's allegations in a securities fraud class action. Here is just one of many examples, again from the U.S. Court of Appeals for the Ninth Circuit:

General allegations of GAAP violations or accounting irregularities are insufficient to establish scienter.

http://www.ca9.uscourts.gov/datastore/memoranda/2011/04/12/09-17418.pdf

And no, the above case is not the mirror factual image of the complaint in JBI's case, so there is no need for you to go our of your way to distinguish it on the fact. I obviously am not referencing it for that purpose.

Lastly, a company's decision to settle does not mean that the company believe it was "obviously" going to lose. Companies settle all the time in order to avoid the costs of litigation, even in cases that fall under the category of "nuisance suit." There is a particularly strong incentive to settle in class action lawsuits because the cost of the discovery process alone can be quite expensive, not to mention a huge distraction to corporate management. I'm not going to bother to research the Altris case any further because it frankly isn't important to me, so I have no idea what factors weighed into the decision to settle in that case. My point there was that the action did not proceed past the pleading/motion to dismiss stage because it settled before the judge ruled on the company's motion to dismiss.

I thought we were having a nice, honest debate there for a while. I would invite you to revert back to it, if you so desire.