MJ
You cover most of the areas that need to be reformed and which make markets unfair to shareholders.
One correction - referral fees to lead clients in class action is illegal. Lawyers can split fees with each other but not with clients.
Getting back to your point. Under corporate law, management works for shareholders. However, our system makes it seem like the opposite is true.
The SEC has no resources and pretty much defaults into doing nothing other than a few high profile cases, e.g., Martha Stewart, to get PR for itself. Plus the ties between the SEC and industry, e.g., ex-employees get great jobs in the private sector, prevents them from really going out of their way to help us retail shareholders.
Bankruptcy is a joke if you've dealt with it. Basically the lawyers take turns in each case divying up the assets. Very little goes to creditors. Nothing goes to shareholders. Lawyers are trustees, on creditors committees, and exchange "offices" with each other from case to case.
In most public corporation cases, management stays, and even votes new options and perks to get what they had before the bk.
In a few cases, shareholders have tried to argue for a shareholder's committee, but judges usually side with the team of lawyers that argue that the shares are worthless. However, as values are subjective, this is an area that needs drastic changes.
What's the remedy? It's not going to happen in court, I can tell you that. We need legislation, in the area of markets, trading, bankruptcy and class action. Unfortunately, it will probably take a major stock market crash before our politicians do anything about it.
That's what is so encouraging about our grass roots "naked short" movement. It was unheard of a year or two ago. Now, it's in the main stream media. |
