TheCorporateCounsel.net

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As noted in this WSJ article and NY Times article yesterday, the big California public pension plan – CalPERS – sued the S&P, Moody’s and Fitch rating agencies
for “wildly inaccurate and unreasonably high” ratings on structured investment
products.

While the ratings agencies face
other lawsuits for losses, the CalPERS’ complaint attacks the way in which the ratings
agencies do business.  In particular, it alleges that the agencies went beyond
being passive “raters” of structured investment products, and became an integral
part of the issuance of these products (Item 47 of the complaint, at page
11).

Even though the SEC seems likely to propose more regulation of the credit rating agencies right now – see this Directorship blog – although it already has done quite a bit over the past six months (this and this), it
may be that lawsuits like this one become an additional driver for more changes to
the rating industry. 

Gearing Up for the Fall: Financial Crisis Inquiry Commission

Yesterday, as noted in this Bloomberg article, Congress appointed the Commissioners for its Financial Crisis Inquiry Commission and the Commission is expected to start its investigations in September regarding 22 enumerated possible causes of the financial crisis (as well as the causes of the failure of major financial institutions). It’s a pretty broad dictate – so the witch hunt begins!

Here are the appointments (as excerpted from this Gibson Dunn memo):

• Phil Angelides, jointly appointed by House Speaker Pelosi and Senate
  Majority Leader Harry Reid, will chair the Commission. Mr. Angelides served
  formerly as California’s State Treasurer from 1999 to 2007.
• Bill Thomas, jointly appointed by House Minority Leader John Boehner
  and Senate Minority Leader Mitch McConnell will serve as the Commission’s
  vice-chair. Mr. Thomas is a former House Ways & Means Committee
  Chairman.

Importantly, the Chairperson and Vice Chairperson will jointly select the
staff director and other staff of the Commission.

House and Senate Democratic Leaders also appointed the following
individuals:

• Brooksley Born, former Chair of the Commodities Futures Trading
  Commission during the Clinton administration.
• Byron Georgiou, Las Vegas-based businessman and attorney who serves
  on the advisory board of the Harvard Law School Program on Corporate Governance.

• Senator Bob Graham, former U.S. Senator and Chair of the Senate
  Intelligence Committee and former Governor of Florida.
• Heather Murren, retired Managing Director for Global Securities
  Research and Economics at Merrill Lynch.
• John Thompson, Chairman of the Board of Directors of Symantec
  Corporation.

House and Senate Republican Leaders also appointed the following
individuals:

• Doug Holtz-Eakin, former Director of the Congressional Budget Office
  and former Chief Economist of the President’s Council of Economic Advisers.
• Keith Hennessey, former Director of the National Economic Council
  during the George W. Bush administration.
• Peter Wallison, Co-Director for Financial Policy Studies at the
  American Enterprise Institute and former Counsel to President Ronald Reagan. 

How to Plan for CEO (and Other Senior Manager) Succession

We have posted the transcript for our recent webcast: “How to Plan for CEO (and Other Senior Manager) Succession.”

– Broc Romanek