Corporate Governance

Fraudsters as Executives, Elude SEC Ban

By Jessica N. Dell

As the Wall Street Journal reports, some publicly traded companies have seized upon a so called "Grey Area"  to employ those accused of fraud who are subject to an SEC Ban.   Eaglesham highlights the case of Jason Galanis, who enjoys an officer-like position at Gerova Financial, despite having agreed in 2007 that he was prohibited from serving formally in such capacity until 2012. 

While the SEC's ban would otherwise protect investors by prohibiting Galanis and other accused fraudsters from serving as an officers or directors at publicly traded companies for a period of years,  Eaglesham says Gerova got around it by simply creating a separate, not publicly traded subsidiary to employ Galanis anyway.   If it is strictly legal to do so, it still doesn?t quite seem ethical.  Perhaps it?s time to scrutinize companies like Gerova who seem to be thumbing their noses at the Agency and at the investors for whose sake the ban was imposed. 

Full post as published by PomTalk on February 07, 2011 (boomark / email).