Tag Archive for ‘Dodd-Frank Wall Street Reform and Consumer Protection Act’
For more than two years, Goldman Sachs’ reputation has been under fire for its alleged role in the financial crisis. On August 9, 2012, the U.S. Justice Department (DOJ) announced it won’t prosecute the firm. Goldman Sachs’ spokesman said, “We are pleased that this matter is behind us.”
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.
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.
In July 2011, the United Nations Human Rights Council endorsed a set of principles designed to address human rights abuses by business. In an interview, the man who led development of those principles – Harvard professor John Ruggie – discusses their implications and explains why he thinks the newly-coined term “human rights due diligence” has already become a permanent entry in the lexicon of international business.
Many corporate responsibility advocates think large institutional investors should serve as “stewards” of the companies in which they invest, helping them achieve long-term sustainable value. But do those investors have the capacity to perform the role now expected of them? Two prominent governance experts are not so sure – and think much more research and analysis is needed before the question can be answered.
Stanford University professor David Larcker says context is critical in the choices that organizations make in designing governance systems and the impact those choices have on executive decision-making and the organization’s performance. “There is no question to us that ‘governance matters,’” he writes. “The fundamental challenge is to understand when and how it matters.”
The U.S. Court of Appeals for the District of Columbia Circuit vacated Securities and Exchange Commission rules adopted in 2010 designed to give shareholders the ability to nominate directors through corporate proxy materials. The court ruled that the SEC “acted arbitrarily and capriciously for having failed once again…to adequately assess the economic effects of a new rule.”
Almost a year ago, President Barack Obama signed the Dodd-Frank Wall Street Reform Act into law. Now, some emerging roadblocks reinforce a fear that Dodd-Frank, which was intended to touch on almost every aspect of the American financial system, may never provide the sweeping reform it promised.
Commission chairman Mary Schapiro said that while the Sarbanes-Oxley Act has helped protect whistleblowers and improve internal reporting systems at public companies, “too many people remain silent in the face of fraud. Today’s rules are intended to break the silence of those who see a wrong.”
House Republicans introduced legislation targeting the already-delayed whistleblower rule in the Dodd-Frank financial reform law. The move, backed by the U.S. Chamber of Commerce, is just the latest in a series of setbacks for those who favor strengthening whistleblowers rules to encourage reporting of wrongdoing within government and businesses.