Article Review: Revenge of the Investor
... The article describes how the offices of Attorneys General in the various states are beginning to get into the act as well, as they respond to consumer and investor sentiments that corporate America has become “more dishonest” over the past few years. The article mentions the security industry’s traditional dispute resolution process (arbitration), and how the state legislature in California is attempting to crack down on conflicts of interest held by arbitrators by passing legislation that requires more thorough disclosure. The arbitration system is viewed by investors as unfairly skewed toward large brokerage firms, however recent pressure from citizen investigators is changing that perception. Also mentioned is the changing role of labor unions with regard to securities disputes and company management policies. Labor unions (who are responsible for large pension plans) are taking a stand with many companies, forcing resolutions to be considered during proxy votes. Unions are forcing limits on golden parachutes for executives and in some cases organizing workers and lobbying the SEC to allow workers to propose their own slates of directors. The article talks about some reforms being proposed or recently passed, such as California’s ethics legislation for arbitrators. The NASD and NYSE filed suit against the State claiming that the ethics legislation was burdensome, and the SEC sided with them, but the case was thrown out on the grounds that a State agency cannot be a party to a dispute at the Federal level (11th Amendment). Businesses in the U.S. have over the past 10 years begun utilizing organizational techniques such as matrix management (borrowed from the Japanese and other for...