Posts Tagged ‘SEC’

SEC Opens Inquiry Into Apple and Steve Jobs

January 21, 2009

This morning, Bloomberg reported that the Securities & Exchange Commission is reviewing disclosures about Apple Chief Executive Officer Steve Jobs’s health problems to ensure investors weren’t misled.

Later today, the Wall Street Journal followed up with a story reporting that the SEC “has opened an inquiry into Apple Inc.’s disclosures about Chief Executive Steve Jobs’s health.”

I am not surprised that the SEC has opened an inquiry, if it has. Last week, I wrote a story questioning the actions of the Apple board with respect to this issue, based on interview with corporate governance experts. Many experts said that Jobs and the Apple board, of which Jobs is a member, have not been forthcoming enough about the health of Jobs and the company’s succession plan.

I reiterated these thoughts on an interview with Fox News in which I criticized the actions of the Apple board. I thought it seemed a bit dodgy that Apple and Jobs could have changed their view of his health problems so drastically within one week. In my blog, I questioned the first letter that Jobs wrote. “The letter should have been much more measured in its presentation and tone, indicating that the cause of Jobs’s health problems was not totally clear,” I wrote.

Then again, it’s entirely possible that the board did nothing wrong, as Stanford law professor Joe Grundfest noted. If board members believed Jobs was going to be fine, they may not have seen a big need to be more forthcoming about his health or future, he notes. “One of the hallmarks of a complex medical condition is a diagnosis can change over time,” Grundfest says. “If the board has told the truth, then they’ve handled it best as they could.”

These are the issues the SEC will be looking into. What did the board know before the first letter was written? And what did they learn after it was written?

Admittedly, this is a very difficult situation for Apple. And I hope the company is cleared of any wrongdoing. But this is an inquiry that needs to happen in order to protect the shareholders of Apple and any other company that may find itself in a similar situation.

Who Should Obama Appoint to Head the SEC?

December 16, 2008

The Bernard Madoff scandal is the last straw for the existing leadership of the U.S. Securities & Exchange Commission.

That the SEC was warned repeatedly about Madoff, and even conducted several inquiries into his firm, but did not uncover the massive fraud proves that the important agency needs a major overhaul.

SEC chairman Christopher Cox has proved to be an ineffective leader, to say the least. Most famously, Cox assured investors nine months ago that Bear Stearns was fine. It collapsed three days later.

It gets worse. According to a story by Stephen Labaton in today’s New York Times, the SEC has been plagued by some pretty shady behavior, including botched investigations and “accusations that several SEC employees have engaged in illegal insider trading and falsified financial disclosure forms.”

This is unbelievably appalling! The agency tasked with enforcing securities laws is allegedly breaking those very laws! Check out this link to the reports of the SEC’s inspector general.

Many people don’t realize this but the SEC was created as a result of the 1929 stock market crash and related financial shenanigans. The main reason for the creation of the SEC in 1934 was to regulate the stock market and prevent corporate abuses relating to the offering and sale of securities and corporate reporting. Sounds relevant today, no?

In fact, a strong regulator overseeing financial markets is more important than ever in today’s complex, fluid and interconnected global economy.

So who would be an ideal leader to overhaul the agency and take it into the future?

I am not sure. But I think we need someone with same gravitas and experience like past SEC chairman Arthur Levitt, who ran the SEC from 1993 to 2001 and was widely credited with upgrading the agency and serving as a strong advocate and protector of investors.

Although chairman Cox is a smart guy with law and business degrees from Harvard, I think experience has shown that he did not have a full understanding of today’s financial markets. So whoever gets the job needs to have a lot more experience working on or with Wall Street.

I am throwing out a few ideas here just to get the conversation started:

John Thain, former CEO of Merrill Lynch
Warren Buffett, investing legend
Joel Seligman, leading scholar of SEC and president of University of Rochester
Lynn Turner, former chief accountant of the SEC
Laura Unger, former SEC Commissioner and Acting Chairperson of the SEC