Off-boarding: A recent column at NYTimes.com makes the case for “fitness to serve” protocols for corporate directors and officers. Looking at the decision by Lance Armstrong to resign from the board of the Livestrong Foundation, the author, a lawer, points out that having fitness to serve policies in place makes it easier for the company to “confront, and resolve, those sticky situations — legal, financial or personal — that tarnish a board’s fiduciary credibility.” Noting that the board’s main duty is to protect the reptuation of the organization, the writer says that the policy should extend to a director facing regulatory penalties, professional ethics sanctions, and even controversial personal conduct, like extramarital affairs or other inappropriate relationships. Defining what a board considers to be unacceptable behavior seems like a no-brainer for a board that is diligent about keeping pace with best practice in good governance.
Hedge fund headlines: Another piece at NYTimes.com summarizes recent and past global events in which hedge funds played a central role. The point of the article is to underscore how much sway asset managers can have, in national and even international matters. Specifc funds and events chronicled: Elliott Associates and Argentina, Soros and the British pound, Kynikos’ suspicions about Enron (the demise of which provided the impetus for Sarbanes-Oxley), and hedge funds and the US housing bubble. This blog has long argued that as hedge funds become a larger part of the global capital equation, having a voice in economic and policy issues is only natural. Topics like bond market rules, short selling, corporate governance, disclosure, and fincial sector regulation are critical to how hedge funds operate and they should speak up when there interests are at issue. More broadly, a strong economy and fair markets help our system thrive and hedge funds, especially the largest, need to understand that they are global citizens with broad interests that converge with economic, regulatory, and fiscal policy.