December 29, 2003

Stock Ownership Guidelines Grow in

Over the past year, there has been significant growth in the number of companies that require or encourage officers and/or directors to maintain certain levels of stock in their companies. Several studies show that nearly half of large companies now maintain them for officers (up from a third) and about a third of large companies maintain them for directors.

For members, we have posted 20 samples of stock ownership guidelines.

270-Page Report on SEC’s Weaknesses

On Christmas Eve, the WSJ ran a lengthy article about the SEC weaknesses as detailed by a 270-page report prepared by SEC staffers and McKinsey consultants. The report is non-public and was commissioned by then-Chair Harvey Pitt.

The article indicates that the report is fairly critical of the agency as being too reactive and not having sufficient resources to do its job. Two telling statistics: only 33% of enforcement investigations are generated internally and 15% of them come from reading the morning papers.

Corp Fin is assailed for having an “assembly line mentality” for focusing on achieving numerical targets of reviews and picking “smaller, easier-to-review filings rather than more complex ones.” I wonder how much McKinsey got paid to come in and tell them all these well known facts. I coulda done it for half…