PomTalk: Corporate Governance

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Corporate Governance

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Commentary and analysis of developments in the fields of corporate governance, executive compensation, securities regulation and related areas geared towards institutional investors (hedge fund, pension fund, etc.).
By Murielle Steven, Jason S. Cowart, Jeremy Lieberman and and Fei-Lu Quan.

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Last Entry: November 12, 2009 at 13:05:23

From the Pages of The Pomerantz Monitor: The Party Continues on Wall Street

Posted on November 12, 2009
As Shaheen Rushd reports in the September/October issue of The Pomerantz Monitor, analysts and public officials have blamed the near-collapse of the financial system in large part on excessive pay, both its outsized amount and the fact that short-term risk-taking...

Pay to Play

Posted on November 04, 2009
Recently, Risk Metrics revisited an article published earlier this year called Is 'Pay-to-Play' Driving Public Pension Fund Activism in Securities Class Actions? An Empirical Study, written by David H. Webber, the Wagner Fellow in Law & Business at NYU's Law...

OTC Bill Clears Another Hurdle

Posted on October 26, 2009
Following the House Financial Services Committee?s approval of its version of proposed legislation to reform regulation of the OTC derivatives market on October 16, 2009, the House Agriculture Committee unanimously approved its own version of the bill on October 21,...

From the Pages of The Pomerantz Monitor: SEC Brings First Clawback Action

Posted on October 20, 2009
The September/October issue of The Pomerantz Monitor reports on the first ?clawback? action brought by the SEC for violation of Section 304 of the Sarbanes-Oxley Act. Section 304 of SOX provides that if a company is required to restate its...

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The Bumpy Road to Recovery

Posted on October 19, 2009
During a high-profile White House event Friday, Obama slammed the Chamber?s multi-million advertising campaign against the consumer agency, calling the group?s spots ?completely false.? ?We?ve made clear that only businesses that offer financial services would be affected by this agency...

SEC Delays Implementation of Proxy Access Rules

Posted on October 15, 2009
SEC Chairwoman Mary Shapiro recently announced that the Commission's proposed changes to proxy access rules would not become final until sometime in 2010 ? at the earliest. These rule changes, designed to give shareholders the ability to nominate their own...

Key Pieces of Legislation to Empower Investors

Posted on October 07, 2009
On October 1, 2009, Congressman Paul E. Kanjorski, Chairman of the House Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises released discussion drafts of three pieces of legislation aimed at reforming needed areas in the U...

From the Pages of The Pomerantz Monitor: Senator Specter Introduces Two Bills That Could Prove Very Important to Plaintiffs

Posted on October 05, 2009
As Susan Weiswasser reports in the current issue of The Pomerantz Monitor, two pieces of legislation recently introduced in the United States Senate, both sponsored by Arlen Specter of Pennsylvania, could, if passed, prove very important to plaintiffs...

SEC Chairwoman Shapiro Outlines the Commission?s Multi-Pronged Approach to Sweeping Financial Market Reforms

Posted on September 24, 2009
In her speech earlier this month at the Transatlantic Corporate Governance Dialogue ? 2009 Conference, SEC Chairwoman Mary Shapiro addressed a number of factors that precipitated the current financial crisis. For one thing, she identified a failure of corporate governance...

Report Recommends Establishing Clear Link Between Pay and Performance

Posted on September 24, 2009
The Task Force on Executive Compensation convened by the Conference Board Governance Center to address the loss of public trust in the processes for oversight of executive compensation issued recommendations for corporations to restore credibility and public trust in pay...

The SEC's Latest Blunder

Posted on September 21, 2009
The SEC alleged earlier this year that BofA had "materially lied" in shareholder communications prior to its takeover of Merrill Lynch, by failing to disclose bonuses owed to Merrill employees. So how does one properly punish the wrongdoer? By further...

Everything You Always Wanted to Know About Securities Litigation

Posted on September 17, 2009
The Council of Institutional Investors has published a primer on securities litigation, which we think our readers will find interesting and educational. Everything You Always Wanted to Know About Securities Litigation... But Were Afraid to Ask is available in PDF...

CII Supports PCAOB?s Concept of Audit Partner?s Signature

Posted on September 16, 2009
In response to the Public Company Accounting Oversight Board?s (?PCAOB?) request for public comments on its proposal requiring the engagement partner of an auditing firm with final responsibility for the audit to sign the audit report, the Council of Institutional...

Obama Preaches Reform on the Anniversary of Lehman?s Collapse

Posted on September 15, 2009
On Monday, September 14, the one-year anniversary of the collapse of Lehman Brothers, a crowd assembled at Wall Street?s Federal Hall ? steps away from the New York Stock Exchange ? to hear President Obama speak on the necessity of...

The House Passes HR 2664

Posted on September 14, 2009
The House passed HR 2664, which requires the Chairs of the PCAOB, the SEC, and the FASB to testify annually before Congress on accounting and auditing issues, beginning this year. The goal of HR 2664 is to assist Congress in...

From the Pages of The Pomerantz Monitor: Squabble Over BofA/Merrill Merger Has Major Ramifications

Posted on September 03, 2009
In the July/August issue of The Pomerantz Monitor, the editors report on the latest rumblings over Bank of America?s merger with Merrill Lynch. Did they or didn?t they? Did Ben Bernake and Hank Paulson threaten to fire the entire Bank...

Alternative Methods for Detecting Corporate Fraud

Posted on August 31, 2009
Countless times in the past few years the markets have been struck by the revelation of a pervasive fraud. To say shareholders have suffered is an understatement. As such, there is a constant effort by analysts, commentators and regulators to...

The Top Ten List of the Richest CEOs

Posted on August 17, 2009
On August 13, 2009, the governance research firm, the Corporate Library released its list of the 10 highest paid chief executive officers for 2008. The honor of the highest paid CEO for 2008 went to Blackstone Group?s Stephen Schwarzman who...

From the Pages of The Pomerantz Monitor: Institutional Investors Have Greatly Strengthened Securities Litigation

Posted on August 13, 2009
As Adam Prussin reports in the July/August issue of The Pomerantz Monitor, Congress instituted the "lead plaintiff" provisions of securities law to encourage institutional investors to become more involved in securities class action lawsuits. Since investors with the largest losses...

Banks Bailout Themselves in Billions

Posted on August 03, 2009
According to a newly released report by Attorney General Cuomo of New York, nine of the financial firms that were among the largest recipients of federal bailout money paid at least 5,000 of their traders and bankers bonuses in total...

House Approves "Say on Pay"

Posted on August 03, 2009
In a positive move for investors, the U.S. House of Representatives approved a bill, which would allow investors to vote on compensation packages for top company executives. With the exorbitance of executive pay a hot topic recently, many expected that...

SEC Considering New Rules and Examiners for Credit Rating Agencies

Posted on July 16, 2009
SEC Chairwoman Mary Shapiro recently told the U.S. House of Representatives Financial Services Committee that the Commission is hard at work revising its oversight role with respect to credit rating agencies. Specifically, the Commission is considering implementing new rules for...

SEC Votes to Eliminate Broker Discretionary Voting

Posted on July 13, 2009
As reported on June 29, 2009, the SEC met to discuss the issue of discretionary broker voting. On July 1, 2009, The SEC voted 3-2 to eliminate broker discretionary voting in director elections for meetings held on or after January...

From the Pages of The Pomerantz Monitor: LAMPERS Takes on Excessive Compensation

Posted on July 08, 2009
As reported by Fei-Lu Qian in an April PomTalk post, the Louisiana Municipal Police Employees? Retirement System (?LAMPERS?) took the responsible step in demanding answers and accountability from directors of Chesapeake Energy by filing a ?books and records? demand in...

From the Pages of The Pomerantz Monitor: The Value of Private Enforcement of Securities Laws

Posted on July 08, 2009
According to an article in the May/June issue of The Pomerantz Monitor, it has long been recognized that private enforcement is a necessary supplement to the enforcement capabilities of the Securities and Exchange Commission (?SEC?). This proposition is embodied in...

Wall Street Back to Its Old Ways

Posted on July 02, 2009
As there are some small signs of recovery in the financial crisis, the large Wall Street financial firms are beginning to get back to their normal practice of dishing out huge pay packages. According to an article in the Wall...

SEC to Decide on Broker Discretionary Voting

Posted on June 29, 2009
On July 1, 2009, the SEC will hold a Sunshine Act Meeting at which it will consider the issue of instructed broker voting. The New York Stock Exchange (?NYSE?) has long classified uncontested director elections under Rule 452 as a...

Regulation of OTC Derivatives is on the Horizon

Posted on June 22, 2009
Following the Obama Administration's proposals last week to bring tighter regulation to financial markets, SEC Chairwoman Mary Schapiro testified before a Senate Banking subcommittee today that it would be relatively simple to change the law to allow for the regulation...

Empowering Shareholders Through Legislation

Posted on June 19, 2009
There are at least two legislation in the current Congress that are worth noting, the Shareholder Empowerment Act of 2009 and the Shareholder Bill of Rights Act of 2009. According to the Council of Institutional Investors, the legislation will "strengthen...

Supreme Court Expansion Of Twombly

Posted on June 17, 2009
The Supreme Court decision in Bell Atlantic v. Twombly, 550 U.S. 544 (2007) created some debate whether the decision applied to non-antitrust cases. The Supreme Court?s recent decision in Ashcroft v. Iqbal, No. 07-1015 (U.S. May 18, 2009) applying Twombly...

New Rule FAS 165

Posted on June 15, 2009
Last month, the Financial Accounting Standards Board (FASB) issued a new rule, which will be applied to the accounting for, and disclosure of, subsequent events not addressed in other applicable Generally Accepted Accounting Principles (GAAP). FAS 165 establishes general standards...

Movement Grows to Split Chair, CEO Posts

Posted on June 10, 2009
The shareholder ouster last month of Bank of America CEO Ken Lewis from the company?s chairmanship position highlights the growing sentiment that the roles of chairman and CEO should be split. In recent months, in part due to the financial...

The Heated Debate Over EPS Guidance

Posted on June 08, 2009
A debate is brewing over whether the use of earnings-per-share ("EPS") guidance provides the most accurate picture for investors and whether in today's economic environment, it is irresponsible and risky for companies to emphasize short-term results rather than long term...

Antitrust/Competition Law Changes In Play Across The Pond

Posted on June 04, 2009
In the European Union, competition law is enforced across the member states by the Directorate of Competition (DG-IV). In the U.S., the antitrust laws are enforced by the Department of Justice, Antitrust Division. State and private atorneys? general. Class actions...

From the Pages of The Pomerantz Monitor: Return of the Overpaid Investment Banker

Posted on June 04, 2009
As Joshua Silverman reports in the May/June issue of The Pomerantz Monitor, when it comes to sharing the pain caused by the economic downturn, corporate America has two standards: one for the working class, and another for highly-paid executives. When...

Monitoring by Institutional Investors Is Still Critical

Posted on June 02, 2009
In a new paper entitled, Institutional Monitoring Through Shareholder Litigation, a group of professors studied the effectiveness of institutional investors acting as lead plaintiffs in securities class actions. As noted in this blog by the authors, the study found that...

The Era of Shareholder Democracy?

Posted on May 18, 2009
On May 20 the SEC will meet to propose historic new rules to give long-term shareholders greater access to the director nomination process. Part of the discussion will revolve around what criteria must be met before a shareholder is given...

The Pomerantz Firm Hosts 12th Annual Abraham L. Pomerantz Lecture at Brooklyn Law School

Posted on May 05, 2009
Each year, the Pomerantz firm hosts the Pomerantz Lecture at Brooklyn Law School, which honors the life and work of Abraham L. Pomerantz, a 1924 graduate of Brooklyn Law School and the founding partner of the Pomerantz firm. The lecture...

From the Pages of The Pomerantz Monitor: How Judges Are Elected, or Art Imitates Life

Posted on April 20, 2009
An article in the April issue of The Pomerantz Monitor addresses potential problems caused by our current practice of electing judges. During the first week of March, the U.S. Supreme Court heard argument in Caperton v. Massey Coal Company, which...

Understanding Fair Value Accounting

Posted on April 20, 2009
As previously reported in PomTalk, fair value accounting is a topic that has generated much interest as opinions have abounded as to its ability to enhance the clarity and accuracy of information provided to investors. The Council of Institutional Investors...

Reform Suggestions on Rating Agencies

Posted on April 14, 2009
Given the critical role that credit rating agencies have played in the financial crisis, the Council of Institutional Investors (CII) released a white paper on the regulation of credit rating agencies calling for stronger oversight and accountability of them...

FASB Approves Fair Value Accounting Standards

Posted on April 06, 2009
The Financial Accounting Standards Board ("FASB") approved three new fair value accounting standards that give financial institutions discretion in valuing asset-backed securities. The first rule makes it easier for banks to ignore valuations on a security if they deem the...

Demanding Books and Records from Chesapeake Energy

Posted on April 01, 2009
Last week, the Louisiana Municipal Police Employee Retirement System took the responsible step in demanding answers and accountability from directors of Chesapeake Energy by filing a ?books and records demand? in a state court of Oklahoma. As reported by Gretchen...

From the Pages of The Pomerantz Monitor: AIG, the Company We Love To Hate

Posted on April 01, 2009
In the April issue of The Pomerantz Monitor, Adam Prussin gives some background on how AIG ? the company that many feel bears the greatest blame for our present financial crisis ? destroyed itself. By now most of America realizes...

NASAA Testifies Before Senate Banking Committee

Posted on March 30, 2009
Fred Joseph, President of the North of the American Securities Administrators Association, Inc. (NASAA), testified on March 26, 2009 before the Senate Banking Committee asking for increased authority over investment advisers and the general ability to address fraud in its...

ICE US Trust Debuts First US-Based Credit Default Swap Market

Posted on March 27, 2009
ICE US Trust LLC, a division of InternationalExchange Inc., began processing credit default swap trades on March 9. By obtaining provisional exemptions from the SEC and developing the necessary technology quickly, ICE Trust has established a viable, centralized counterparty between...

Livent?s Last Act

Posted on March 27, 2009
As reported in the NY Times, this week in the Ontario Superior Court, Garth H. Drabinsky, the former chief executive of the defunct Broadway production company Livent and his business partner Myron I. Gottlieb were convicted of forgery and defrauding...

Pension Funds? Principles for Washington

Posted on March 23, 2009
In an effort to restore confidence in the capital market system, at least ten leading public pension funds of the United States have developed and announced a set of financial regulation principles. The ?Principles of Financial Regulation Reform: A Model...

Comment on Madoff

Posted on March 12, 2009
As Bernie Madoff pled guilty earlier today, there are still countless unanswered questions. Daniel Berger, a partner at Pomerantz Haudek Block Grossman & Gross LLP gives his insights to this $50 billion Ponzi scheme on The Today Show.

Madoff to Plead Guilty on Thursday

Posted on March 10, 2009
Bernard Madoff, the infamous architect of the largest Ponzi scheme in history, is set to plead guilty in federal court in Manhattan on Thursday, to charges that will result in a life sentence. See further coverage here. And read the...

SEC Settlements Decline in 2008

Posted on March 09, 2009
In 2003, the year following the enactment of Sarbanes Oxley, the number of SEC settlements soared. However, since 2003 the number of SEC settlements has steadily declined hitting a five year low of 672 settlements in 2008. NERA Economic Consulting,...

Don?t Blame Fair Value Rule for Banks? Capital Losses in Financial Crisis, Says SEC

Posted on March 03, 2009

From the Pages of The Pomerantz Monitor: Scandal at Satyam

Posted on February 24, 2009
In January, while the world was still reeling from revelations of Bernard Madoff?s $50 billion Ponzi scheme, another huge scandal shocked the markets: a billion dollar fraud at Satyam Computer Services Ltd. (?Satyam?), a leading Indian outsourcing firm whose name,...

White House and Treasury Department Release New Executive Compensation Guidelines for Companies Receiving Public Funding

Posted on February 17, 2009
Last week President Obama and the Treasury Department issued a new set of guidelines on executive pay for financial institutions that are receiving governmental assistance in the current financial crisis. The guidelines aim to ensure that public funds are directed...

The Madoff Saga Continues as Pomerantz Files the First Derivative Suit Against an Auditor

Posted on February 11, 2009
Britain?s Times Online has taken a keen interest in the Madoff scandal as numerous members of English society have emerged on lists of Madoff clients. Members of Parliament have now joined ranks with the likes of the New York Mets,...

Banks Reaped Windfalls from Tax Code Change in Bailout Debacle

Posted on February 03, 2009
In the midst of Congressional approval of the controversial $700 billion bailout package which passed last year, the Treasury Department quietly issued a ruling in which it repealed a 22-yr tax law limiting a kind of tax shelters arising in...

Santander?s Offer to Madoff Clients Questioned

Posted on January 29, 2009
Yesterday, we discussed Banco Santander?s offer to compensate its private banking clients for money lost in Madoff?s $50 billion Ponzi scheme. Taking a closer look at the offer, the Wall Street Journal reports in an article entitled ?Santander?s Clients React...

Banco Santander Takes Lead in Madoff

Posted on January 28, 2009
This week, Spain?s largest bank, Banco Santander SA offered a solution to its clients who had invested 2.33 billion euros ($3.1 billion) in Santander?s Optimal Strategic US Equity Fund that was ultimately channeled to Bernard Madoff. Specifically, Santander is offering...

From the Pages of The Pomerantz Monitor: Bail Out Funds Have Yet to Unfreeze the Credit Markets

Posted on January 27, 2009
As President Obama appeals to Republicans to pass his $825 billion economic stimulus package, called the "American Recovery and Reinvestment Plan," it?s worth re-examining the Troubled Asset Relief Plan (?TARP?) initiated by the Bush Administration (known in some circles as...

Congress Introduces Bill to Increase Funds to Fight White Collar Crime

Posted on January 26, 2009
Recently, Senators Charles Schumer and Richard Shelby introduced bipartisan legislation to enhance SEC enforcement capabilities, as well as overall federal enforcement ability, according to Jim Hamilton?s blog. The Supplemental Anti-Fraud Enforcement (?SAFE?) Market Act would grant an additional $110 million...

Must Questions for Schapiro

Posted on January 15, 2009
On January 12, 2009, the Council of Institutional Investors, a nonprofit association of more than 140 public, union and corporate pension funds, forwarded a letter to the Chairman of the Senate?s Committee on Banking, Housing and Urban Affairs, Senator Christopher...

From the Pages of The Pomerantz Monitor: The Crash Hits Pension Plans

Posted on January 13, 2009
As Susan Weiswasser reports in the January issue of The Pomerantz Monitor, the economic slump has hit pension funds hard. The Center for Retirement Research at Boston College estimates that the value of investments in each of private sector and...

Recouping Losses Post-Madoff

Posted on January 12, 2009
While investors are still reeling from the stunning impact of the revelation of Bernard Madoff's unprecedented $50 billion Ponzi scheme, opinions abound as to where they should turn for relief. Aside from lawsuits against Madoff and the fund-of-funds who invested...

From the Pages of The Pomerantz Monitor: Investment Advisors? Standing to File Suits on Behalf of Their Clients Is Curtailed by a Federal Appeals Court

Posted on January 05, 2009
As Pomerantz Managing Partner Stan Grossman reports in the January issue of The Pomerantz Monitor, when Congress passed the Private Securities Law Reform Act (?PSLRA?) in 1995, it changed the rules for the appointment of a lead plaintiff in securities...

From the Pages of The Pomerantz Monitor: European Funds Turn to U.S. Courts to Recover Subprime Losses

Posted on December 16, 2008
As Joshua Silverman reports in the December issue of The Pomerantz Monitor, pension funds around the globe have lost hundreds of billions of dollars in the recent mortgage and credit market meltdown. Increasingly, they are turning to U.S. courts to...

SEC Takes Actions Against Rating Agencies

Posted on December 08, 2008
By now, it is well known that the three major credit rating agencies were strongly criticized by lawmakers, regulators, and investors for failing to timely and accurately downgrade mortgage-backed securities. On December 3, 2008, the SEC approved several measures to...

From the Pages of The Pomerantz Monitor: Shareholders of Seized Banks Take It on the Chin

Posted on December 04, 2008
As Robert Axelrod reports in the December issue of The Pomerantz Monitor, amidst the seemingly daily expos�s of Wall Street gluttony and Potemkin Village-like banking accounting tricks is a lesser known banking phenomenon that may just as significantly impact pension...

Deloitte Study Links Bankruptcy and Fraud

Posted on December 01, 2008
As the financial crisis continues, the advent of fraud at struggling companies becomes a distinct danger that management needs to address. According to a recent study published by the Deloitte Forensic Center, ?Ten Things About Bankruptcy and Fraud,? companies that...

SEC Considers Revamping FAS 157 - Fair Value Accounting Rule

Posted on December 01, 2008
On November 21, 2007, the SEC held a Roundtable discussion to assess whether the fair value accounting rule which requires assets to be valued at market prices, should be changed or replaced. FAS 157 have been blamed for contributing to...

SEC Attempts to Simplify Mutual Fund Disclosures

Posted on November 24, 2008
On November 20, the SEC voted unanimously to simplify mutual fund prospectuses so that investors can easily understand disclosures. Essentially, the rule provides for the sending of summary prospectuses to investors that detail the fund's risks and returns, including investment...

From the Pages of The Pomerantz Monitor: Feds Launch Multiple Criminal Investigations of Lehman

Posted on November 19, 2008
The November issue of The Pomerantz Monitor reports on the ongoing imbroglio at Lehman Brothers. As Lehman?s former CEO was being grilled on Capitol Hill, the FBI announced that it had opened a criminal investigation into the public statements Lehman...

The Road to CDS Transparency Continues

Posted on November 17, 2008
As a follow up to recent posts regarding credit default swaps (CDSs), note that on November 14, 2008, the SEC issued a Memorandum of Understanding with the Federal Reserve Board and the Commodity Futures Trading Commission dealing with central counterparties...

SEC Takes Decisive Action toward Credit Default Swap Regulation

Posted on November 06, 2008
As Carol Straw reported here two weeks ago, Senator Tom Harkin recently introduced a bill that would revise the regulation of credit default swaps (?CDSs?). Recall that CDSs act as insurance policies for corporations on the defaults of bonds and...

From the Pages of The Pomerantz Monitor: Fingers Point at the SEC

Posted on November 06, 2008
During the recent election campaign, when John McCain publicly declared that SEC Chairman Cox should be fired, most dismissed it as a cheap shot designed to grab headlines. But on second thought, he may have been on to something. The...

FASB Proposes Rules Changes: Putting Securitized Assets Back on Banks? Balance Sheets

Posted on October 28, 2008
During the past weeks, we have provided ongoing reporting on congressional and other efforts to reform the market for securitized assets. The FASB has joined the dialogue. According to CFO.com, it has proposed changes to two accounting rules requiring more...

From the Pages of The Pomerantz Monitor: The Next Wave of Subprime Litigation

Posted on October 23, 2008
As Joshua Silverman reports in the October issue of The Pomerantz Monitor, it?s not surprising that the first wave of litigation arising out of the mortgage meltdown focused on the common stocks of companies with subprime-related businesses. These were primarily...

Congress Introduces Bill to Regulate Credit Default Swaps

Posted on October 21, 2008
Last week, we reported that securitized assets are expected to survive despite the current credit crisis but with improved governmental oversight to promote transparency in the market for these kinds of investments. In 2008, the notional market in credit default...

Back to Basics: Keeping Securitized Assets Transparent and Simple

Posted on October 17, 2008
Securitization will survive the current market crisis, according to Jim Hamilton, who reported on the remarks of Adair Turner, the new chair of the UK Financial Services at the International Banking Seminar in Washington. However, banks must return back to...

From the Pages of The Pomerantz Monitor: DOJ Guidelines for Prosecuting Companies Are Overhauled

Posted on October 08, 2008
As Adam Prussin reports in the October issue of The Pomerantz Monitor, the U.S. Department of Justice has yet another new policy for the investigation and prosecution of businesses. The latest revisions relate primarily to what constitutes a company?s ?cooperation?...

The End of Mark-To-Market

Posted on October 03, 2008
In light of the current financial crisis, the passage of the Emergency Economic Stabilization Act of 2008 will create a real possibility that the SEC will suspend mark-to-market accounting or ?fair value? accounting. However, the Center for Audit Quality (?CAQ?),...

From the Pages of The Pomerantz Monitor: Read This Book

Posted on September 23, 2008
In the September issue of The Pomerantz Monitor, Teresa Webb reported on a notable new book, ?When the Good Pensions Go Away ? Why America Needs a New Deal for Pension and Health Care Reform,? by Dr. Thomas J. Mackell...

They Broke It, We Bought It

Posted on September 22, 2008
Last week, Treasury Secretary, Henry Paulson, briefed Congress on the ?apocalyptic? magnitude of the present credit crunch. Congress responded by putting together a $700 billion bailout package for the beleaguered financial institutions. On Sunday, the Financial Services Roundtable ? a...

New Rule: Comments Not Required, Effective Immediately

Posted on September 17, 2008
On September 17, 2008, the SEC announced new rules effective immediately, to protect investors against ?naked? short selling abuses. According to the SEC press release, the new rules require: that short sellers and their broker-dealers deliver securities by the close...

Lehman Bites the Dust, AIG Nervously Waits in the Wings

Posted on September 15, 2008
Today, Lehman Brothers Holding Inc. filed for bankruptcy after takeover talks with Barclays Plc and Bank of America failed this weekend. The investment banking giant succumbed to the subprime mortgage crisis it helped to create. Lehman was the biggest underwriter...

DOJ and FTC Disagree on Antitrust

Posted on September 10, 2008
Immediately after the Justice Department released its 215-page report laying a broad framework on antitrust enforcement, three of the four Federal Trade commissioners have come out and criticized the new policy as ?a blueprint for radically weakened enforcement? against anticompetitive...

From the Pages of The Pomerantz Monitor: UBS Pressured to Settle Auction Rate Securities Claims

Posted on September 09, 2008
The September issue of The Pomerantz Monitor relays events that led UBS to enter into a global settlement with federal and state regulators over auction rate securities. UBS, the Swiss banking colossus with $1.9 trillion under management and over 80,000...

A New Frontier ? Disclosing the Financial Risks of Climate Change

Posted on September 09, 2008
On August 27, 2008, New York State Attorney General announced an agreement with Xcel Energy for the utility firm to provide more disclosure to investors on the financial risks of climate change. According to Cuomo, ?This landmark agreement sets a...

Not Minding GAAP

Posted on September 03, 2008
On August 27, the SEC proposed a timetable for transitioning all public companies from reporting their financial statements under U.S. generally accepted accounting standards to international financial reporting standards (?IFRS?) within eight years. Specifically, the SEC estimates that 110 companies...

The Jury Is Out on IRS? New Whistle Blowers Policy

Posted on September 02, 2008
If you have ever considered whistle blowing on your corporate employer for violating federal laws, risking your job may offer little incentive to do the right thing notwithstanding that Sarbox offers whistleblower protection. However, if you an accountant considering whistle...

From the Pages of The Pomerantz Monitor: Suspicions Grow Over the Demise of Bear Stearns

Posted on August 26, 2008
In the September issue of The Pomerantz Monitor, Adam Prussin reports on growing suspicions over the demise of Bear Stearns. In July, SEC chief Christopher Cox told Congress that the Commission was investigating whether illegal trading spurred the collapse of...

Investors Welcome New Disclosure Rules for Banks and Other Sellers of Credit Derivatives

Posted on August 19, 2008
Last week, the Financial Accounting Standards Board (FASB) adopted new rules for banks and other purveyors of credit derivatives to help investors get a better read on these financial instruments. For companies with calendar year-ends, the decision leaves them with...

PCAOB to KPMG: Time to Shape Up

Posted on August 18, 2008
Auditors have been lobbying Congress for the imposition of liability caps ever since the collapse of Arthur Anderson in 2002 but a recent Public Company Accounting Oversight Board ("PCAOB") report on KPMG confirms that auditors need accountability for the procedures...

New Study on Financial Reporting Gives Banks Low Marks for Substance and Transparency

Posted on August 15, 2008
According to a report released by PricewaterhouseCoopers earlier this week, large banks have been holding back critical information from investors. PwC reviewed the 2007 financial statements of 22 global banks that follow GAAP and international financial reporting standards...

Tax Liability Is Optional for Corporations

Posted on August 13, 2008
At the request of two senators, Carl Levin of Michigan and Byron L. Dorgan of North Dakota, the Government Accountability Office, the investigative arm of Congress, issued a report finding that two out of every three U.S. corporations paid no...

An Uneasy Trend: FDIC reports increase in the number of banks on its ?problem? list

Posted on August 12, 2008
As of March 2008, the FDIC reported that 90 banks surfaced on its ?problem? list radar, up from 76 for the last quarter of 2007. This number comprised $26.3 billion in assets, or about 0.2 percent of total assets in...

From the Pages of The Pomerantz Monitor: Hedge Funds Secretly Engage in ?Total Return Equity Swaps? to Gain Seats on CSX Board

Posted on August 12, 2008
The August issue of The Pomerantz Monitor reports on the questionable tactics successfully used by hedge funds to gain seats on the CSX board. For years, two offshore hedge fund groups, The Children's Investment Funds and the 3G Funds, have...

The SEC Advisory Committee on Improvements in Financial Reporting's Final Report to the SEC

Posted on August 11, 2008
In an effort to increase the effectiveness of financial statements in informing the investing public, the SEC Advisory Committee on Improvements in Financial Reporting recently issued its final report, which contains recommendations for major reform to regulation and standard setting...

Group Falls Short In Solving Financial Crisis

Posted on August 08, 2008
A group consisting of so called experts from some of the top financial institutions such as HSBC, Lehman Brothers, JP Morgan Chase, and Bank of America, has just released a 160 page report entitled, ?Containing Systemic Risk: The Road to...

Citigroup the Latest to Make Good on ARS Marketing Fraud

Posted on August 07, 2008
As we have been reporting recently, following the February 2008 collapse of the auction rate securities (?ARS?) market, hundreds of thousands of investors were left holding hundreds of billions of dollars worth of illiquid ARS ?- essentially long-term bonds with...

To Blog or Not to Blog

Posted on August 04, 2008
In today?s age of technological advancement the use of blogs has become commonplace and is now a tool that companies can utilize for the ongoing exchange of opinions and ideas among management, employees, and shareholders. However, an SEC release that...

When Did the Auction Rate Securities Market REALLY Collapse?

Posted on July 31, 2008
The prevailing wisdom holds that the market for auction rate securities (essentially long-term bonds that carry an interest rate that is reset through periodic auctions) froze up last February. That is when the public auctions for these securities started to...

Credit Agencies Illegally Gave Municipalities Low Ratings

Posted on July 30, 2008
Connecticut?s Attorney General, Richard Blumenthal sued the three major credit rating agencies for violating Connecticut?s Unfair Trade Practices Act by intentionally giving low credit ratings to bonds issued by Connecticut?s municipalities and other public entities...

Congress Passes the Housing and Economic Recovery Act

Posted on July 29, 2008
Motivated by the recent Fannie Mae and Freddie Mac crisis, Congress passed the Housing and Economic Recovery Act (HR 3221) on Saturday. The act is regarded as the most significant housing legislation in decades and is designed to address the...

From the Pages of The Pomerantz Monitor -- Foreign Investors Seek U.S. Justice

Posted on July 29, 2008
As Tamar Weinrib and Marc Gross report in the August issue of The Pomerantz Monitor, our friends south of the border aren't the only foreigners clamoring to get into the United States. Overseas institutional investors are also beating down the...

Did Pension Funds Play An Unintentional Role In Bear's Collapse

Posted on July 25, 2008
As are readers know, the SEC recently opened an investigation into the role that short sellers played in the collapse of Bear Sterns. There are various allegation of misconduct, including the allegation that some hedge funds flooded the market with...

Companies Fail to Meet Tax Disclosure Requirements

Posted on July 23, 2008
According to a new survey, The Seigel Tax Reserve Report, published by Seigel & Associates, LLC, more than 28% of ?large public companies are not meeting the disclosure requirements for tax reserves required by the Financial Accounting Standards Board rule...

From the Pages of The Pomerantz Monitor: Should SEC "Fair Funds" Supplant Private Securities Fraud Litigation?

Posted on July 15, 2008
As Pomerantz Partner Marc I. Gross advised readers in the July issue of The Pomerantz Monitor, the SEC has set up an $800 million fund to be paid to investors in American International Group ("AIG") securities during a four year...

Hope for Fannie and Freddie?

Posted on July 14, 2008
Yesterday, the government announced a plan designed to renew confidence in the suffering Fannie Mae and Freddie Mac, which would allow them to continue to function as shareholder owned companies. Under this plan, the Bush administration said it would ask...

Rating Agencies Behaving Badly

Posted on July 10, 2008
This week, the SEC released its much anticipated report on the three major agencies. Among the findings after a ten month investigation, the report concluded that the firms failed to properly manage conflicts of interest and violated their own internal...

Fed and SEC Agree to Share Information

Posted on July 07, 2008
The Federal Reserve and the Securities and Exchange Commission today announced an information-sharing agreement designed to better detect potential risks to the U.S. financial system. Officials say that this agreement should enhance regulatory cooperation between the two agencies, allowing them...

Delaware to Decide on Proxy Proposal

Posted on July 02, 2008
With more than 60% of U.S. companies being incorporated in Delaware, the state?s legislature established a procedure last year where the Securities and Exchange Commission is able to get direct access to Delaware?s highest court and requests rulings on various...

From the Pages of The Pomerantz Monitor: The Best of Times and the Worst of Times

Posted on July 01, 2008
The July issue of The Pomerantz Monitor reports that on June 12, MasterCard Worldwide released the first set of findings of its "Wordwide Centers of Commerce" report, including its Index ranking the top 50 cities worldwide on a variety of...

SEC Commissioners Win Sentate Committee Approval

Posted on June 27, 2008
The Senate Committee on Banking, Housing and Urban Affairs has approved the three nominees for the open SEC positions clearing the way for full Senate approval. The Committee unanimously approved the nominations of Luis Aguilar, Troy Paredes and Elisse Walter...

New SEC Rules Promise to Reform the Credit Ratings Process

Posted on June 19, 2008
Last week, the Securities and Exchange Commission voted to formally propose credit rating agency reforms, which the Commission promises will ?bring increased transparency to the ratings process and curb practices that contributed to recent turmoil in the credit markets...

What Do People Think About Public Pensions?

Posted on June 18, 2008
A study examining the public?s perception of defined benefit vis � vis defined contribution plans -- entitled ?The New Intersection on the Road to Retirement: Public Pensions, Economics, Perceptions, Politics & Interest Groups? -- was recently presented at the Wharton...

From the Pages of The Pomerantz Monitor: Wachovia Bank Fined for Aiding and Abetting Telemarketing Scam

Posted on June 17, 2008
Readers of the June issue of The Pomerantz Monitor learned of unconscionable telemarketing scams aided and abetted by Wachovia Bank, the nation's fourth largest bank. In February, Wachovia first announced that it was the subject of an investigation by the...

New Auditors? Reports without Audits

Posted on June 11, 2008
In order to make auditing firms more transparent to the investing public, the Public Company Accounting Oversight Board (?PCAOB?) recently adopted rules that will require firms to file with the PCAOB their own annual reports and special interim reports...

Say on Pay Prospects Brighten

Posted on June 10, 2008
Regardless of who is elected President, shareholders may soon get the type of ?say-on-pay? rights they deserve. Earlier this year, the House of Representatives passed a bill requiring companies to give shareholders the opportunity to cast non-binding votes on the...

Credit Ratings Agencies Reach Agreement with New York Attorney General

Posted on June 06, 2008
Wall Street?s top three credit ratings agencies -- Standard & Poor?s, Moody?s Investors Service, and Fitch Ratings -- finalized an agreement yesterday with New York Attorney General, Andrew Cuomo, which is designed to improve transparency in the mortgage-backed securities industry...

Restatements Decline with the Assistance of the SEC

Posted on June 04, 2008
According to a new study from Glass, Lewis & Co., there was a significant drop in the number of financial restatements filed by companies to correct accounting errors. Specifically, in 2007 there was a 17% decline in restatements, compared to...

From the Pages of The Pomerantz Monitor: "Liar's Loans" Are Playing a Huge Role in the Subprime Crisis

Posted on June 03, 2008
In the current issue of The Pomerantz Monitor, Adam Prussin writes about the role of ?Liar?s Loans? in the subprime crisis. We did not make up the term Liar's Loan, which is actually a term of art in the mortgage...

From the Pages of The Pomerantz Monitor: The Next Frontier: The Subprime Mess Spreads to Europe

Posted on May 21, 2008
As Murielle Steven Walsh reports in the current issue of The Pomerantz Monitor, international investors have been wondering how deep the impact of the US subprime distress will be in Europe; and what, if anything, will be done about it....

SEC Unanimously Supports New Technology

Posted on May 20, 2008
The SEC would like to improve the way it and investors get financial information from corporations and has proposed a rule change that would require companies to provide that information using a form of interactive data. The format is called...

Former SEC Chairman Back Obama

Posted on May 16, 2008
Three former chairmen of the Securities and Exchange Commission publicly endorsed Democratic Sen. Barack Obama's bid for the presidency Wednesday, including one who served under President Bush. William Donaldson, who was SEC chairman for approximately 2� years under current President...

Who Gave ?Say On Pay? Right? AFLAC

Posted on May 14, 2008
Earlier this month in an annual meeting, Aflac?s shareholders had their say on the company?s executive compensation policies. With 93% of Aflac?s shareholders saying ?yes? to the compensation packages of its five top executives, Aflac became the first American public...

UBS Agrees to Repurchase Illiquid Auction Rate Securities from Massachusetts Municipal Entities

Posted on May 08, 2008
As we have been discussing, the market for Auction Rate Securities (ARSs) froze up in mid-February of this year -- leaving investors largely unable to unload these debt securities at anything approaching fair market value. A number of Massachusetts municipalities...

From the Pages of The Pomerantz Monitor: The Market for Auction Rate Securities Freezes Up

Posted on May 06, 2008
As Shaheen Rushd writes in the current issue of The Pomerantz Monitor, auction rate securities form a $330 billion market. Issuers include closed-end bond funds, cities, municipalities, student loan companies, and nonprofit entities. Brokers mostly sold auction rate securities to...

Former SEC Chairmen Weigh In on Paulson?s Plan

Posted on April 30, 2008
Much has been written over the past month including on these very pages about Treasury Secretary Hank Paulson?s plan to ?reform? the U.S. financial services regulatory system. Among the critics of the plan are three former chairmen of the SEC...

Still No Say-On-Pay

Posted on April 30, 2008
With at least $312 billion of asset write-downs and losses by financial firms since the start of 2007, investors thought this would be the perfect year to pressure corporate boards on executive pay and give shareholders non-binding advisory votes on....

Credit Rating Agencies Under Intense Scrutiny

Posted on April 24, 2008
The SEC has launched a two-pronged attack on the credit rating agencies believed to be partially responsible for the subprime mortgage debacle. The agencies -- namely, Moody?s Investors Service, Standard & Poor?s, and Fitch Ratings -- have recently come under...

From the Pages of The Pomerantz Monitor: Study Shows Institutional Investors Play Key Role In Securities Litigation

Posted on April 23, 2008
As reported in the current issue of The Pomerantz Monitor, the Corporate Library, the research organization that has weighed in on executive pay, recently released another study, concluding that companies whose CEO compensation practices are poorly aligned with shareholder interests,...

Regulation and baseball: why the Paulson plan makes no sense

Posted on April 21, 2008
A lot of ink has been spilled on Treasury Secretary Hank Paulson's plan to close the Commodity Futures Trading Commission, Office of the Comptroller of the Currency, and Office of Thrift Supervision, and shift their duties to the SEC. Most...

Senators Call for Examination of SEC?s Enforcement Division

Posted on April 18, 2008
Democratic Senators Christopher Dodd and Jack Reed recently asked the Government Accountability Office to initiate an examination of the SEC?s Enforcement Division. Specifically, Dodd (the Banking Committee Chairman) and Reed (the Securities Subcommittee Chairman) are focused on whether the SEC...

The Power of Myth

Posted on April 18, 2008
In his latest book, ?20/20? reporter John Stossel attacked the media for fear mongering and debunked a variety of so-called ?myths.? Stossel?s criticism is grounded in his view that although well intentioned, his brethren in the media often overlook facts...

European Union Grapples With Class Action Model

Posted on April 14, 2008
While U.S. government and business leaders are doing everything in their power to stamp out class actions in America, the European Union is slowly embracing the class action mechanism. On April 3, 2008, the European Commission published a much anticipated...

Auction Rate Securities -- Not Quite the Same as Cash.

Posted on April 10, 2008
By now you know (perhaps all too well) that countless investors who were told by their brokers that so-called Auction Rate Securities were "as liquid as cash" have seen that liquidity dry up. For the uninitiated, Auction Rate Securities are...

From the Pages of The Pomerantz Monitor: Backdating Charitable Donations

Posted on April 01, 2008
As reported in the current issue of The Pomerantz Monitor, the scandal of options backdating at hundreds of companies across the country is approaching its second anniversary. But just as this story starts to show signs of winding down, another...

DOJ Report Accuses KPMG of Enabling Bankrupt Home Lender New Century

Posted on March 27, 2008
Michael J. Missal, a former SEC Enforcement Division attorney, has wrapped up a five-month investigation for the Department of Justice into the failure of New Century Financial, the first large mortgage company to fold in the wake of the subprime...

From the Pages of The Pomerantz Monitor: Partner Stan Grossman Discusses "Secondary Actors" After Stoneridge

Posted on March 18, 2008
Within hours after the Supreme Court's decision in Stoneridge, news reports and law firm advisories were buzzing that the Court had sounded the death knell for "scheme liability" claims against "secondary actors" under the securities laws. In fact, though, and...

From the Pages of The Pomerantz Monitor: Bankruptcy Judge Drastically Cuts "Bankruptcy Exit Bonuses" for Delphi Execs

Posted on March 18, 2008
The Pomerantz Monitor recently updated its readers on the attempts by troubled Delphi Corp.?s senior executives to award themselves big bonuses. Delphi, the bankrupt auto parts supplier, became infamous last year when it threatened to dump its pension obligations on...

Secretary Paulson: We Thought We Knew You

Posted on March 14, 2008
Welcome to the party Secretary Paulson! In a speech yesterday by the Treasury Secretary concerning the sub-prime mess, and the recommendations of the President's Working Group on Financial Markets, the Secretary sounded nothing like himself. Instead of his familiar mantra...

Investor Group Commences Campaign Against Wall Street Banks

Posted on March 13, 2008
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...

Subprime Litigation, the Role of the Rating Agencies, and the ?Journalist?s Privilege?

Posted on March 06, 2008
George Covington and Wen Hutchinson, both of King & Spalding LLP, recently addressed the role played by rating agencies in the subprime mortgage crisis. (Their article appears in the March 2008 issue of The Metropolitan Corporate Counsel, which is accessible...

Even CFOs Favor Say on Pay

Posted on March 05, 2008
According to a new survey by BDO Seidman, LLP, only 31% of chief financial officers at major technology companies believe that their companies allow shareholders to vote on their executive compensation plans. However, nearly two-thirds of the 100 CFOs surveyed...

How changes to SEC Rule 144 affect institutional investors

Posted on March 02, 2008
Seemingly innocuous SEC rule changes can have dramatic effects on markets. Many professional traders attribute the speed of the recent meltdown to the SEC?s decision last year to eliminate the ?downtick rule? for short sales. On February 15, 2008, SEC...

From the Pages of The Pomerantz Monitor: A Material Weakness in the SEC?s Own Financial-Reporting Controls

Posted on February 25, 2008
In the current issue of The Pomerantz Monitor, Leigh Handelman Smollar reports on continuing problems at the SEC. In its 2007 audit of the SEC, the Government Accountability Office (GAO) has identified a material weakness in the SEC's own financial-reporting...

Rethinking the Cause of the Subprime Crisis

Posted on February 21, 2008
In a recent article, Patrick Fouhy challenges the idea that interest rate resets are largely responsible for triggering the bulk of subprime mortgage defaults. Rather, he contends, 11.2 percent of subprime loans made in 2007 have already ended in default;...

Executive Pay Grows Faster Than Revenue

Posted on February 20, 2008
According to a new study of 45 randomly selected publicly traded companies by ERI Economic Research Institute and the Wall Street Journal, executive compensation increased 20.5% from a year ago while revenues just grew 2.8%. Specifically, the study found the...

SEC Favors No Proxy Access

Posted on February 13, 2008
In the ongoing battle to get more shareholder access to corporate proxies, the SEC has just sent another blow to investors. According to a media report, the SEC sent dozens of ?no action? letters to number of public companies, including...

KEYWORD: CONFIDENCE

Posted on February 11, 2008
A report just released by a working group of the Financial Stability Forum ? an international group of regulators, supervisors and central banks created in 1999 on recommendation of the Group of Seven nations -- warns of a long period...

KPMG Forensic Accountant ?Makes Sense of the Subprime Debacle?

Posted on February 08, 2008
The current issue of The Metropolitan Corporate Counsel features an insight-filled interview with Rich Girgenti, National Practice Leader for Forensic Services at KPMG LLP. Mr. Girgenti shares his views on the subprime mortgage debacle -- and, in particular, where the...

Even Board Members Believe CEOs Pay Is Too High

Posted on February 06, 2008
According to a just-released survey by Heidrick & Struggles International, Inc. and the Center for Effective Organizations at the University of Southern California?s Marshall School of Business, nearly 33% of directors of public companies surveyed believe that chief executive officers?...

No More Democrats On The SEC

Posted on February 01, 2008
Well, that's it, there are no longer any Democrats on the Securities and Exchange Commission. According to her letter of resignation, yesterday marked the last day for SEC Commissioner Annette Nazareth. This means that the only remaining commissioners are all...

Public Companies (Still) Reluctant to Follow SEC?s Executive Compensation Disclosure Rules

Posted on January 31, 2008
As we reported last fall, the SEC marked the unhappy anniversary of its new executive compensation disclosure rules, which require public companies to reveal exactly how they compensate their top executives. (Please see PomTalk post of November 13, 2007...

Auditors Explain Restatements

Posted on January 30, 2008
To further assist auditors signing off on corporate financial reports, the Public Company Accounting Oversight Board voted to adopt Auditing Standard No. 6 (AS6), Evaluating Consistency of Financial Statements. With the adoption of AS6, an auditor is now require to...

From the Pages of The Pomerantz Monitor -- Mozilo Gives up Godzila-sized Pay Package; Bank of America May Lower its Bid for Countrywide

Posted on January 29, 2008
There are some late-breaking updates to a story in the current issue of The Pomerantz Monitor regarding the Godzila-sized ?severance? package for Countrywide Financial Corporation?s CEO Robert Mozilo. As our readers know, Countrywide is the poster child for the subprime...

A lesson on the importance of internal controls from across the pond

Posted on January 28, 2008
Ever since Sarbanes-Oxley was enacted, corporate lobbyists have derided its internal control provisions as unnecessary red tape that threatens American competitiveness. According to these critics, implementing strong financial controls, and having auditors review their efficacy, was simply not worth the...

Stoneridge: Where Did the Strict Constructionalists Go?

Posted on January 25, 2008
As our readers probably know, the Supreme Court recently decided the Stoneridge case. Although the Court accepted the primary arguments we made on appeal (that the federal securities laws extend liability to secondary actors who commit primary violations and that...

Many Companies Will Not Disclose Performance Goals

Posted on January 23, 2008
In 2006, the SEC began requiring public companies to provide detail information about their stock option awards and the compensation of their highest paid employees in an effort to give investors more transparency on how executives are compensated. However, based...

IS THE FOG SURROUNDING INVESTMENT PROFESSIONALS LIFTING?

Posted on January 16, 2008
Brokers, dealers, investment advisors. Do you have one or all? If all, is each service provided by a different firm or does one firm provide all services? A study just released in pre-publication form by the RAND Corporation, entitled Investor...

From the Pages of The Pomerantz Monitor -- Merrill Lynch, Citigroup, and the Subprime Meltdown

Posted on January 15, 2008
In the current issue of The Pomerantz Monitor, Patrick Dahlstrom and Joshua Silverman analyze the subprime mortgage meltdown and how it affects institutional investors. Investment banks such as Merrill Lynch and Citigroup are taking huge writedowns for securitized instruments built...

Study Finds Wall Street Awash In Conflicts and Insider Deals

Posted on January 14, 2008
The Wall Street Journal recently reported that regulators are investigating whether investment banks engaged in insider trading by purchasing large quantities of shares of target companies when acting as advisors to the purchasers on M&A deals. The investigations were prompted...

SEC Unveils Web-Based ?Executive Pay Finder?

Posted on January 10, 2008
In late December, the SEC launched the first web-based utility that allows investors to compare the executive compensation packages at 500 of the nation?s largest corporations. The database, linked here, is extremely easy to navigate and very complete: it includes...

Compensation Disclosures Continue to Fall Short

Posted on January 09, 2008
As it has been nearly one year since the SEC implemented its executive compensation disclosure rules, the CFA Centre for Financial Market Integrity recently sent a letter to the SEC expressing its dissatisfaction with the way ?the Rules were interpreted...

From the Pages of The Pomerantz Monitor

Posted on January 07, 2008
Pomerantz Partner Adam Prussin recently reported on the hottest development in "socially responsible" investing: "ESG" ratings on environmental, social and governance issues. An increasing number of firms are using ratings formulas for picking stocks that take into account -- in...

Shareholders Think Say on Pay Will Add Value

Posted on December 28, 2007
While debates about shareholder rights are often conducted at a level of abstraction that does not easily lend itself to empirical proof, a group of enterprising academics recently released a paper that attempts to buck this trend, at least with...

House Report Identifies Widespread Conflicts of Interest Among Corporate Compensation Consultants

Posted on December 20, 2007
The Committee on Oversight and Government Reform, chaired by Representative Henry Waxman, just released a report, ?Executive Pay: Conflicts of Interest Among Compensation Consultants.? The report begins by acknowledging the obvious fact that consultants to corporations face a financial conflict...

Government Accounting Office Finds Additional Deficiencies At SEC

Posted on December 17, 2007
For the second time in as many months, the Government Accounting Office (GAO) is set to release a report criticizing the Securities and Exchange Commission (SEC) for serious operational deficiencies. According to The New York Times' Gretchen Morgenson, the report...

CII weighs in on Proposed use of IFRS

Posted on December 14, 2007
With apologies to our readers, we just came across this letter, dated November 9, 2007, which was written by the Counsel for Institutional Investors ("CII") to the SEC concerning the proposal that U.S. issuers be allowed to file financial statements....

The Future of the "Group Pleading Doctrine"

Posted on December 13, 2007
Typically, plaintiffs at the pleading stage satisfy the Private Securities Litigation Reform Act?s requirement of ?pleading with particularity? by invoking the so-called ?group pleading doctrine.? The doctrine allows plaintiffs to make allegations of misstatements and omissions in group-published documents, for...

SEC Demanding More Disclosure on Subprime Losses

Posted on December 12, 2007
As financial companies have taken $76 billion in losses and write-downs due to the collapse of the subprime market, the SEC wants companies to fully disclose those losses in their next annual reports. Yesterday, the SEC sent letters to more...

From the Pages of The Pomerantz Monitor

Posted on December 11, 2007
As Pomerantz Partner Michael Buchman reported recently in The Pomerantz Monitor, The State of New York has one of the largest Medicaid programs in the country, spending approximately $50 billion per year. Up to now, Medicaid fraud has been pursued...

?Say on Pay? Proposals Likely to Become a Central Focus of 2008 Proxy Season

Posted on December 06, 2007
With the SEC?s recent vote to maintain the status quo -- at least for the time being -- with respect to proxy access (please see Josh Silverman?s post of Tuesday, December 4th, below), what?s a shareholder to do? Well, perhaps...

Rethinking Change-In-Control Benefits

Posted on December 05, 2007
According to a new survey by Mercer, in the last two years, 64% of the 182 companies surveyed by Mercer made changes to their change in control (?CIC?) programs for executives in ?response to shareholder concerns that the programs provide...

SEC rejects proxy access

Posted on December 04, 2007
Make no mistake -- Chairman Christopher Cox and the SEC are out to protect corporate interests, not shareholders. In a rushed vote, Cox and the SEC approved a rule that will allow companies to deny shareholders the right to put...

Prominent Corporate Law Scholar Supports Reintroduction of Aiding and Abetting Liability

Posted on November 30, 2007
The New York Law Journal recently published an article authored by influential corporate law scholar, Professor John C. Coffee, Jr. of Columbia Law School. In his opinion piece, Professor Coffee predicts that we are roughly a year away from having...

A Restatement Is A Kiss of Death For Executives

Posted on November 28, 2007
In a new study on management turnover rates, two researchers, Anup Agrawal and Tommy Cooper, found a 10% difference in the adjusted turnover rate for chief financial officers at companies that restated, compared to CFOs at non-restating companies. Moreover, using...

From the Pages of The Pomerantz Monitor

Posted on November 27, 2007
In the November 2007 Pomerantz Monitor, Pomerantz Partner Adam Prussin reported on reverberations of the decision in the KPMG tax shelter case. The district court dismissed the charges against 13 former KPMG employees, holding that the Department of Justice?s then-existing...

The Global Trend Towards Class Actions

Posted on November 26, 2007
While Corporate America and the Paulson committee are doing everything possible to repeal or severely limit the class action mechanism in the U.S., other nations are slowly embracing the concept. According to Portfolio Media, the Italian Senate last week passed...

SEC Chairman Testifies on Proposed New Proxy Access Rules Before Senate Committee

Posted on November 15, 2007
As Murielle Steven Walsh reported a few weeks ago in her PomTalk post of October 24th, SEC Chairman Christopher Cox has been ?criticized for his ambiguous stance on shareholder proxy access.? At issue is the fact that current proxy rules...

Compliance Officers Meet in Washington

Posted on November 15, 2007
Mutual fund and investment advisor Chief Compliance Officers met yesterday in Washington to attend the SEC?s third annual CCOutreach national seminar. The program is designed to help the officers improve their compliance programs by promoting a high level of communication...

Directors? Compensation Keeps Going Up

Posted on November 14, 2007
In a new comprehensive report by Towers Perrin on compensation for outside board directors of publicly traded companies, the report found that total compensation increased to a median level of $174,500 in 2006, up 8% from $162,285 in 2005. According....

Pulled from the pages of The Pomerantz Monitor . . .

Posted on November 13, 2007
Going forward, every two weeks PomTalk will report on a story that first appeared in our related print publication, The Pomerantz Monitor. Jim Hodgson recently informed readers of our print sibling about the first anniversary of the SEC?s new disclosure...