In recent years, senior Wall Street managers relentlessly pursued short-term profit and personal windfalls by any and all means while bringing Main Street to its knees (where it remains to this day.) Meanwhile, most of the managers remain where they were – comfortably in charge and gazing upon the tents of Occupy Wall Street protesters.
The problem of bad corporate governance, of course, extends well beyond Wall Street, into the executive suites of many non-banking Fortune 500 members. One percipient commentator, Kris Broughton, correctly says occupiers should focus on changing corporate governance. But many people's eyes glaze over when discussions turn to boards of directors, proxy voting rules, managerial compensation packages, shareholder rights, etcetera. And, of course, meaningful reform of law and regulations covering such matters is easily tabled in Congress by corporate interests, or permitted to die on the vine inside the revolving doors of conflicted regulatory agencies.
Given the opportunity, the House of Representatives and all announced Republican presidential aspirants would kill the Dodd-Frank Act as quickly as a hollow-point slug brings down a displaced coyote in Texas. President Obama can issue executive orders and push his cabinet to bring about some change, but a president's reach exceeds his grasp when our legislative branch and his own regulatory infrastructure are more responsive to corporate capital than political capital.
American citizens should follow the lead of commoners in medieval England, where the physical infrastructure of poor roads and communications – rather than immobility caused by corporate money – hindered a king's ability to dispense justice. From at least the 1200s onward, commoners grouped together to bring grievances to English courts of law in what became known as “group litigation.”
In 1960s America, when racial bias immobilized much of the executive and legislative branches on civil rights issues, citizens banded together to bring group litigation (now call “class actions”) in federal courts to force change. Protection of consumers and the environment was similarly propelled by citizen class actions in the 1970s.
Today, class actions aiming to improve corporate governance are led by major public and union pension funds joined by individual citizens who all hold shares of stock in the companies they wish to change. To many occupiers now holding direct actions in the aftermath of their evictions, and to those still encamped in the parks of America's cities, the idea that these institutional investors represent their interests and should be supported may seem remote.
In an interview, Lucas Green, an attorney and a research director for Institutional Investor Services Inc.'s corporate governance unit, helped connect the dots:
“The interests of public pension funds, which are often among the largest investors in any given corporation and which seek effective, honest corporate governance focusing on the long term, are aligned with the public interest in several ways.” said Green. “The beneficiaries of pension funds themselves are individual employees, and the funds can exert a positive influence on securities markets and the economy.”
As an example, Green cites a lawsuit led by the California Public Employee's Retirement System (CALPERS), with about $236 billion in assets, that helped force extensive reform in the way the giant insurer United Healthcare Group Inc. is managed. Amid a 2006 federal investigation into illegal back-dating of stock options to enrich senior United Health managers, a separate 2008 New York State investigation of alleged fraud in United Health's consumer billing and other allegations of fraud in the sale of United Health's securities, CALPERS and other investors pursued a class action against United Health in federal court that, in 2009, won:
- $925.5 million in recoveries for allegedly defrauded shareholders;
- Creation of a more independent board of directors to better oversee United Health managers;
- Reform of United Health executive compensation to discourage wrongdoing.
What can individual citizens do to encourage more such actions? People lucky enough to still be covered by a pension fund can contact their fund's managers and encourage them to become “shareholder activists” and fight for change. And all of us can contact members of Congress and demand they resist ongoing corporate pressure to kill class actions as a legal remedy for society's ills.
Medieval English commoners won a working democracy, and American commoners ought to be able to win one back.
We’re not backing down in the face of Trump’s threats.
As Donald Trump is inaugurated a second time, independent media organizations are faced with urgent mandates: Tell the truth more loudly than ever before. Do that work even as our standard modes of distribution (such as social media platforms) are being manipulated and curtailed by forces of fascist repression and ruthless capitalism. Do that work even as journalism and journalists face targeted attacks, including from the government itself. And do that work in community, never forgetting that we’re not shouting into a faceless void – we’re reaching out to real people amid a life-threatening political climate.
Our task is formidable, and it requires us to ground ourselves in our principles, remind ourselves of our utility, dig in and commit.
As a dizzying number of corporate news organizations – either through need or greed – rush to implement new ways to further monetize their content, and others acquiesce to Trump’s wishes, now is a time for movement media-makers to double down on community-first models.
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