Bracing for side effects of reform by Michael L. Faltischek


HELP WANTED: Independent Director

Public company seeks reputable, courageous individual willing to assume independent responsibility and liability for overseeing the actions of management in reporting financial results and assuring proper rewards to management for invaluable services rendered to shareholders. Limited opportunity for insurance coverage. Periodic compensation through modest corporate meals, with limited reimbursement for expenses, in order to maintain independence. Faint-hearted individuals need not apply.

As we learn time and again, every action creates a reaction. History teaches that even the most democratic and lofty ideals underlying revolution usually result in complete reactionary and often totalitarian results.

No one can question the horrific impact on our economy of corporate abuse by companies such as Enron, WorldCom and others that are said to have been the product of out and out chicanery and fraud. No one would suggest that these actions were anything other than totally irresponsible, carried out by people intent upon self-interest and greed. The law has long provided appropriate sanctions and punishment for this type of behavior, and it is unlikely that anyone who has acted improperly will escape the long arm of justice.

The real question becomes what impact the fallout from these misdeeds will have on corporate governance.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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