"The stock has dropped 42 percent since the March 30 announcement, through Monday, and Groupon officers, directors and underwriters were named in a lawsuit filed by investor Fan Zhang in Chicago federal court this month."

I am shocked! Simply shocked that financial improprieties could have taken place. Who could have foreseen this?

Well Joe, given the SEC's history on a lack of prosecuting maleficence it would not be a difficult case to make. Even fines are fairly rare.

When Sarbanes-Oxley was enacted, there were enhanced reporting requirements put in place. Groupon having recently gone public, means that their reporting and disclosure requirements were increased. The CEO and CFO must sign off on those disclosures as being true. If they aren't, then perjury has been committed. I have not read the Group proxy or their first SEC report, assuming that has released, nor will I. So I can't say whether or not any misstatements were made. But clearly, by their own admission, they haven't effectively put in place internal controls monitoring their business practices.

There were fixes that needed to made after Enron and GE (ya, they cooked the books too). Personally, I think that Sarbanes-Oxley is not the right medicine for our public corporations. It is too intrusive and costly. I also think that when Sarbanes-Oxley went for great accuracy of accounting reports, instead of the reporting being representative of the business, something was lost. But with Sarbanes-Oxley or something different, no enforcement leads to the very same problems reoccurring and new ones cropping up.

While there maybe cases of the feds going after companies for violating Sarbanes-Oxley, I haven't heard of any. The SEC is only interested in prosecuting, when they are exposed as being asleep at the wheel. Even then it takes a lot. Remember the mutual fund scandals a decade ago? It took many indictments by the NY AG, before they even acknowledged that there were problems. I think one solution is to reorganized the enforcement arm of the SEC over to Homeland Security, leaving the SEC only to write regulation.