| HBS Case Collection
(Revised from original 1996 version)
Kidder, Peabody & Co.: Creating Elusive Profits
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.
Cost vs Benefits;
Financial Services Industry;
Public Relations Industry;