The ritzy and often glamorized world of deal making on Wall Street gets another slap on its face. With Fidelity's managers fined for accepting gifts and favors in exchange for placing their trades through the 'donors' trading desks, corporate governance in America Inc. takes yet another blow. Measuring Corporate Governance is more than weighing the composition of the Board or succession planning or takeover defences. Corporate Governance includes ethics from the grassroot level upto the highest level of a company.
The main accused in question, the prominent and well known Mr.Lynch (ex manager of FIdelity's highly popular Magellan Fund) was asked to pay $15,948 in disgorgement and $4,183 in interest to settle allegations. Please!! WIll somebody please tell me how this will prevent Mr.Lynch and company from repeating this? This is not even a rap on the knuckles....Kudos to the SEC for following up with these practices and pursuing the accused and ultimately penalizing...but $15948? Fidelity was also asked to pay $8 million to settle claims. But where is this money going to come from anyway? From Mr.Lynch and company? No way...Ultimately the shareholders.....
Hmmmm........I wonder how these situations are taken into account by Corporate Governance rating agencies....GMI, Corporate Library, ISS are you listening guys?
Look out for the Corporate Governance (CG) dashboard with updates of this and other CG blunders.