International Events

Hony. Editor
Dr. Bindi Mehta
(Director, Research at ICSI - CCRT, Formerly, Chief economist, CRISIL)



 
 
International News - Feb, 2003
Wall Street veteran set to head SEC

The Bush administration turned to a Wall Street veteran to help restore confidence in the integrity of corporate America. William Donaldson, co-founder of an investment bank and former head of New York Stock Exchange, to be the next chairman of Securities and Exchange Commission. Donaldson, who has also served in the state department, will take over the US’ Chief financial regulator at a pivotal time. After a year of financial scandal and ground breaking governance legislation from Congress, the independent agency will play a central role in efforts to restore integrity to corporate America.

Harvey Pitt, the outgoing chairman, resigned last month on the night of the mid-term elections, after 15 turbulent and heavily criticized months. William Donaldson will still need to be approved by the Senata when it reconvenes in January. The Richard Shelby, its new chairman is unlikely to stand in the way, analyst said. William Donaldson, who co-founded Donaldson, Lufkin & Jenrette, the investment bank bought by Credit Suisse First Boston in 2000, has said that he was firmly committed to doing everything he can to restore the confidence of investors.



 
Insider trading scandals hit Japan’s ailing finance sector

The Sarbanes – Oxley Act, which the US Congress has passed recently, has significant portions dealing with ethics which have not been as prominently publicised. A recent article in BizEthics Buzz, the online magazine, lists three such provisions –

  • Companies must disclose whether or not they have a code of ethics, and if not why not. They must also disclose any change in or waiver of ethics code.
  • Whistle-blowing employees are protected for providing information to federal officials, congressional members and company supervisors.
  • Attorneys must report material evidence of a securities law violation, or breach of fiduciary duty, to the chief legal counsel or CEO. If those parties fail to respond, attorney must report to the board. Some attorneys believe this duty may conflicts with their fields’ existing ethical codes of conduct.

The other provisions of the act, more generally known are these:

  • CEOs and CFOs must certify their financial reports or accurate, or suffer penalties of $1 million and up to 10 years in prison for “knowing” violations, and up to $5 million and 20 years for “willful” violations.
  • All personal loans to executive and directors by public companies are banned.
  • Executives are required to pay back bonuses or equity based compensation, if companies later restate their financials.

© 2001 Academy of Corporate Governance