Another one for DanScott & the GUMMy crowd:
"SEC TELLS OUTSIDE DIRECTORS: BEWARE
By JENNY ANDERSON
--------------------------------------------------------------------------------
STEPHEN CUTLER
Sharpens knife.
Email Archives
Print Reprint
August 21, 2003 -- The SEC is cracking down on a new group of corporate watchdogs: outside directors.
SEC enforcement chief Stephen Cutler said his agency will pursue and punish all categories of individuals - "management, auditors, lawyers, directors, counterparties" - involved in corporate fraud.
But in the instance of outside directors, Cutler pointed to a case brought by the SEC in April as a template for how the agency might act in the arena of directors.
In a case brought against Boston-based transportation equipment company Chancellor Corp., the SEC alleged that Rudolph Peselman, an outside director who also sat on the audit committee, ignored "clear warning signs that financial improprieties were ongoing.
"It's an important case because there have not been very many cases involving outside directors, and in particular outside directors who weren't themselves actively involved in a fraud," Cutler told The Post.
In cases of corporate fraud, the SEC will look at what information directors had. "You look at what info was brought to the attention of the outside director and how much of a red flag that information was or should have been," said Cutler.
The impact of the SEC's action, and words, may make it harder for companies to recruit board members.
"It is becoming difficult to find people willing to devote the time to serve on a board of directors," says Ernest Badway, a former SEC enforcement attorney. |
