Securities laws are for everyone…
December 11, 2009
Chairman Mary Shapiro’s recent crackdown on insider trading spurred on by the Galleon Management case reminds me of a conversation I had with Borg-Warner’s CEO, Jim Bere′, many years ago. We had just completed a strategy meeting on how to handle a media blitz covering two simultaneous takeover attempts on the Company.
To my surprise, Bere′ said he was very concerned that employees with inside information about the offers might trade the stock, or tip off others who might deal on it, not knowing that both are illegal.
Out of that conversation evolved a communications program that first told employees securities laws pertain to all of them. We reviewed in simple terms, using a very broad brush, how and why each employee must follow these laws. Our premise for the communications program was simple: “Provide a level playing field on material information coming from the Company in order to provide all investors a fair opportunity to realize a gain in their investment in the stock.”
Our concern then was the attention the company was getting from the media and investors. Phone calls were being placed into secretaries, middle managers and even the mail room to see who was in meetings or out of the office. The callers were trying to eke out the slightest trading edge through information some unsuspecting employee might provide.
Today, the threat of material information leaking out to investors through e-mails, message boards and social networking is far beyond anything we could have comprehended back then. For this reason, we make sure our clients have strong disclosure policies, and explain to their employees how securities laws can affect them directly.
