Corporate Governance

Investor Group Commences Campaign Against Wall Street Banks

By Jim Hodgson

Change to Win, a coalition of seven unions which represent millions of American workers, is commencing a campaign against a host of Wall Street firms, ?accusing them of failing to prevent their mortgage-related losses,? according to a recent Financial Times article (available here).  And these firms have every reason to be concerned.  Pension funds affiliated with the CtW Investment Group have more than $200 billion under management; and this union coalition is notoriously proactive in the face of corporate scandal.  Its first attack is expected to be launched against Morgan Stanley, whose annual shareholder meeting is scheduled for April 8.  Citigroup, Merrill Lynch, Bank of America, Washington Mutual, and Wachovia will then follow in quick succession.

In a letter sent to Charles Noski, the chairman of Morgan Stanley?s audit committee, CtW asserted that the audit committee ?failed in [its] duties as they relate to the company?s exposure to mortgage-related risk.?  Morgan Stanley has declined to comment.  Not surprisingly, those banks that have responded to CtW?s recent campaign have stated that there is no basis for the group to mount election challenges. And while CtW has not announced a definite decision on whether to oppose the reelection of specific directors, definite action is certain to follow its publicity campaign.  At the very least, ?legal actions by shareholders seeking compensation from . . . the banks? should be seen as a virtual certainty.  And CtW is poised to be an important player in any such actions.

Full post as published by PomTalk on March 13, 2008 (boomark / email).