The Securities and Exchange Commission thought it might be a neat idea for Corporate Board to have fewer insiders on them so they would serve shareholders and will not allow corporate executives to do so much Hanky Panky and keep getting so big bonus. Unfortunately, as good as this little nifty idea was that it is quite a socialist transformation in American Corporate Board Rooms.
Now we see that at Hewlett Packard, a board not so beholden to the company has been spying and give priviledged, insiders and the information to reporters who then put it out on the Associated Press to undermine the company and causing stock prices lower, hurt by equity and share valuations. Whoops? Looks like the law of unintended consequences of the regulation and meddling rears its ugly head again.
But the story gets worse. CEO of the company wanted to find out who was leaking information and a private investigator was hired. Turns out that the private investigator used “pre-texting” and that really goes against the grain of regulators trying to reduce identity theft, even though federal regulators use the very same trick to track down abuse.
Looking SEC, which wanted more control in American Corporations who were not insiders now have 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 rules, resulting in the law of unintended consequences. Consider this in 2006.