The Magazine of Corporate Responsibility

Archive for November, 2011

Crony Capitalism? Hank Paulson’s Extraordinary Meeting

A new report by Bloomberg News suggests that in July 2008, then-Secretary of the Treasury Hank Paulson met with “a dozen or so hedge-fund managers and other Wall Street executives” to discuss a possible scenario for placing mortgage enterprises Fannie Mae and Freddie Mac into “conservatorship.” Pulitzer Prize-winner Jesse Eisinger says Paulson’s meeting with his former Wall Street peers draws “a picture of a Treasury Secretary who took care of his buddies while allowing the system to blow up.”

Why a Federal Judge Trashed the SEC’s Settlement With Citigroup

A federal judge in Manhattan rejected a proposed settlement between Citigroup and the U.S. Securities and Exchange Commission over a failed security that the bank sold to investors. “If the allegations of the Complaint are true, this is a very good deal for Citigroup,” said U.S. District Judge Jed Rakoff as he refused to sign off on the $285 million proposed settlement agreement.

Margin Call: A Small Movie Unveils Big Truths About Wall Street

Reporter Jake Bernstein – who won a Pulitzer Prize for a series of stories on questionable Wall Street practices – says Margin Call is a “briskly paced and marvelously acted” film which tells “the story of a Wall Street that has evolved from an economic helpmate to an economic predator.”

Campus Crises Highlight Risk Management Weaknesses

Columnist Gael O’Brien says recent crises at University of California Davis, Syracuse University and Penn State University raise questions about the role of risk management on campuses. One problem, she writes, is that university leaders “often don’t have practice thinking through how their values, and those of the institution, will come into play in a variety of different potential situations.”

Two New Corporate Forms to Advance Social Benefits in California

California Governor Jerry Brown recently signed into law competing bills that create two new corporate forms — a “flexible purpose corporation” and a “benefit corporation” — intended to allow entrepreneurs and investors the choice of organizing companies that can pursue both economic and social objectives. Here’s a legal analysis of the implications for businesses with a social purpose.

Boards Respond to Stakeholder Concerns

The economic crisis, increased rules and regulations, and heightened scrutiny of boards’ roles have “corporate directors feeling pressure to be more effective in the boardroom,” according to an annual survey of directors of large companies by PricewaterhouseCoopers. Key concerns include executive compensation, risk management, strategy, succession planning, information technology security and fraud.

Say on Pay: Identifying Investor Concerns

Advisory shareowner votes on executive compensation were the big story of proxy season 2011, the inaugural year for “say on pay” at most U.S. public companies. In the first half of the year, shareholders voted against proposals at some 37 companies. The Council of Institutional Investors, a leading advocate for say on pay, offers its analysis of the “no” votes and what they might say about current executive compensation practices.

Pfizer’s Latest Twist on ‘Pay for Delay’

Pharmaceutical companies have sought for years to protect their expensive brand-name drugs by paying generic rivals handsome sums of money to put off efforts to introduce cheaper, generic alternatives that could steal market share. But now it appears the drug company Pfizer is adding yet another twist to its efforts to delay generic competitors. As The New York Times reports, the company seems to have struck a deal with certain pharmacy benefit managers – the middlemen in the pharmaceutical industry – to block generic versions of Lipitor.

Study Finds Sustainable Companies ‘Significantly Outperform’ Financially

A new study by researchers at Harvard Business School and London Business School concludes that companies which have voluntarily embraced sustainable business cultures with a substantial number of environmental and social policies “significantly outperform their counterparts over the long-term, both in terms of stock market and accounting performance.”

VIDEO: Jon Stewart Dissects Jon Corzine and MF Global

Has anything changed in banking regulation since the crisis of 2008? Consider the case of MF Global Holdings Ltd., a New York-based securities firm that filed for bankruptcy protection on Oct. 31 after disclosing sizable exposure to derivatives and other investments related to billions of dollars in European sovereign debt. The firm was headed by Jon Corzine, a former CEO of Goldman Sachs who subsequently went into politics and was elected U.S. Senator and, later, Governor of New Jersey. In this video clip, “Daily Show” host Jon Stewart compares and contrasts the positions and behavior of Jon Corzine, the politician, with Jon Corzine, the CEO banker.