December 13, 2005
To those concerned,
Why are you asking for a new avenue for possible abuse rather than addressing the real issue? Would it not be better to address the underlying flaws in the system that allow for the rampant over-voting and issuance of materials to shareholders who own more shares than the issued and outstanding of given securities? How can any company get the proper representation with fails in the system?
This is like trying to redesign the cart before the horse is even purchased to pull the wagon, or stuffing the ballot box for a candidate with votes from non-existent voters. Before you let the internet handle the issuance of materials, tell us how you intend to protect the rights of shareholders where counterfeit shares exist.
To quote a colleague: Beyond the basic issue of fraud, the readers must understand that the second largest revenue operation in many of these large firms comes from the Prime Brokerage Divisions. This is the division that handles the stock lending operations. Shares are being loaned out into the market to cover short sale executions and the institutions and preferred clients are receiving a kickback for the lending via an interest payment. The mom and pop investor will not see any revenue when their shares are being lent out but those holding the majority of shares, Institutions, Hedge Funds, wealthy clients, will. It is these same entities that control much of the proxy voting power.
Lets stop the fraud first and get control of the abuse of the rights investors have before we try to make another major thoroughfare for the abuse to continue.