OH dear! A bit of mess over at Glass Lewis & Co., the proxy advisory firm acquired in December by China-based Xinhua Finance Media.
Two senior executives at the corporate governance firm — former SEC chief accountant Lynn E. Turner and former Wall Street Journal reporter Jonathan Weil — have quit, apparently in protest over the disclosure transparency, or lack thereof, of their new parent company.
Over the weekend, Barron’s reported that Xinhua had neglected to disclose in its IPO prospectus that its CFO Shelly Singhal, 39, had a controversial past. That, according to Barron’s, included running a firm under a cease-and-desist order from the National Association of Securities Dealers (NASD), fighting a civil racketeering suit for his investment activities, and being a major investor in a couple of firms that “turned out to be outrageous frauds.”
In the circumstances, it’s understandable why people like Turner and Weil would want to put distance between themselves and their employer.
My favorite part of the story as told by CFO.com is this paragraph:
The Barron’s article said its reporter, Bill Alpert, had asked Xinhua CEO Bush if she had known about an NASD action against Singhal’s firm when the prospectus was prepared for Xinhua Finance Media, and that Bush had answered yes, but that her legal advisers had told her “that the prospectus didn’t have to make that disclosure.”
Those lawyers again. Sticking to the rules and not giving a cow plop about the principles involved.
P.S. There’s something else a little unusual about the players in this story. Lynn Turner is male. Shelly Singhal is also a man. But Fredy Bush is female. Got that?