International Investing

Linked from dealbreaker.com this piece from The American Thinker discusses the ultimate Sox irony: that the NY Times, the ultimate Sox cheerleaders, supported harsh criminal penalties for laws that they subsequently violated. Careful what you wish for:

Not disclosing a “material weakness” can be construed as corporate fraud under the law’s broad reach. Maybe not wise policy, but the Times supported the law.

And under the law, it’s not enough for a CEO to say “I didn’t know.” Specifically the certifications say “based on my knowledge” not the far more forgiving “to the best of my knowledge.” It’s often referred to as “a CEO’s blood oath.”

There are several provisions of the law using the term “willful,” meaning executives have a duty to be aware of malfeasance.

In court, directors (which would include Chairman Sulzberger) have also been found to be liable if they should have known something, and had to pay defendant judgments out of personal wealth, not just directors’ insurance when shareholders sued. This potential civil and criminal liability of officer and directors is one of the things that has greatly accelerated buyouts, de-listings, and foreign-only listings.