Mercury Finance Co. was a fast-growing auto-finance and insurance company. In January 1 997. however, the auditors discovered that recently announced 1996 earnings had been grossly overstated and prior years' earnings had been overstated to a lesser extent. The estimated size of the earnings overstatement for 1996 is described in the following excerpt:

Required:
Using more recent new reports (The Wall Street Journal Index, Dow Jones Interactive, and Bloomberg Business News are good sources), answer the following questions. 1. Whom did the courts and regulatory authorities hold responsible for the misstated financial statements 2. What were Mercury's closing stock prices on the day before (January 28. 1997) and the da) alter

(January 30, 997) the announcement of the misstatement? 3. How might

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BUSINESS BRIEF-MERCURY FINANCE CO. Estimates for 1996 Revised Again, Now to a Big Loss 04/24/97 p. A8 The Wall Street Journal Mercury Finance Co., which previously warned that it had grossly overstated earlier years earnings, said it now expects to report up to a $55 million loss for 1996. In January, the Lake Forest, III., auto-finance company initially reported earnings of $120.7 million for 1996. Soon afterward, however, Mercury disclosed the accounting "irregularities" and estimated that last year's earnings probably would be about $56.7 million. Yesterday, Mercury said in an "update" that 1996 results will include an additional $125 million in loss provisions, as well as a $25 million reserve to cover the planned sale of its Lyndon insurance unit. As a result. the company anticipates a 1996 net loss of between $48 million and $55 million. In New York Stock Exchange composite trading, Mercury closed down 25 cents, or 13%, at $1.75.