The Securities and Exchange Commission thought it might be a nifty idea for Corporate Board of Directors to have fewer insiders on them so they would serve the will of the shareholders and not allow corporate executives to do so much hanky panky and keep getting such big bonuses. Unfortunately, as nice as this little nifty idea was it is somewhat a socialist projection into the American Corporate Board Rooms.
Now we see that at Hewlett Packard, a Board of Director not so beholden to the company has been spying and giving priviledged, insider and proprietary information to news reporters who then put it out on the Associated Press undermining the company and causing stock prices to drop, therefore hurting shareholders equity and share valuations. Whoops? Looks like the law of Unintended Consequences due to over regulation and meddling rears its ugly head again.
But the story gets worse. The CEO of the company wanted to find out who was leaking information and a private investigator was hired. Turns out the private investigator used “pre-texting” and that really goes against the grain of regulators trying to curb identity theft, even though Federal Regulators use the very same trick to track down abuses.
Looks the SEC, which wanted more Board of Directors in American Corporations who were not Insiders now has egg on their face for pushing such a policy in the first place, but we should not be so surprised, as this is just one of hundreds of regulations, which results in the Law of Unintended Consequences. Consider all this in 2006.