"Jumping the sharks" is a phrase that grew out of an episode of "Happy Days," a television show well known to Baby Boomers. It is that episode featuring the show's favorite character Fonzie wearing his trademark black leather motorcycle jacket and jumping over a pool of sharks on water skis.
That episode was seen as marking the beginning of once very popular show's decline. It took awhile and nothing the writers or producers could do, including adding new characters and storylines, could change it.
What the phase "jumping the sharks" has come to mean is a point of no return when something is no longer special and unique. I wonder if KPMG's offering of tax shelter advice from 1996 through 2002 is it's equivalent of "jumping the sharks." Was it the point of no return for the firm? As with "Happy Days," only time will tell.
But if you ask me, unlike Fonzie, I think KPMG ended up in the water and it is struggling and worrying about drowning or being eaten by sharks.
The most pressing danger is the Department of Justice investigation. That is readily apparent in the June 16th press release issued by KPMG. In it, the firm takes "full responsibility for the unlawful conduct by former KPMG partners" and adds assurances that it won't happen again. The firm is currently negotiating with the Department of Justice on sanctions and is hoping it can avoid criminal charges, knowing full well what happened to Andersen.
However, other things are evolving in the marketplace. For one, the best and brightest of college graduates who majored in accounting are being told by many of their professors not to consider KPMG as a potential employer. There are also a number of lawsuits that have been filed against KPMG by disgruntled tax shelter clients. Additionally, The SEC is developing contingency plans for relaxing the rules on auditors if also KMPG ceases to exist.
In some ways, I see parallels here to what Andersen experienced following the Enron and WorldCom debacles--possible criminal conviction and tremendous damage to a brand. Unlike with Andersen, the powers that be are seriously evaluating the impact on the marketplace before deciding whether to indict and KPMG is showing remorse and offering to accept some punishment.
As with those who worked on that particular episode of "Happy Days," it would be interesting to know, how many at KPMG from 1996 to 2002 saw the significance in the firm promoting those tax shelters.
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