SACRAMENTO: An investors’ bill of rights that requires corporations to disclose information about their operations and executive compensation was signed into law Saturday by Gov. Gray Davis.
The measure, by Assemblyman Kevin Shelley, D-San Francisco, requires corporations to report twice a year:
– The names of the independent auditors they use.
– Any significant loans they make to their directors at preferential rates.
– The compensation received by their directors and top five executives.
– Any bankruptcies filed by the company, its directors and officers in the previous 10 years.
– Any fraud convictions of the company, its directors or officers within the previous 10 years.
– Any violations by the corporation in the previous 10 years of securities or banking laws.
“Increasing the amount of information available should bolster investor confidence and help protect Californians from corporate fraud,” Davis said.
“I believe in free enterprise. But I also believe that a healthy free
enterprise system requires a system of checks and balances which protects investors and stabilizes the market.”
Douglas Heller, a spokesman for the Foundation for Taxpayer and Consumer Rights, said Davis also needs to sign a bill by Sen. Martha Escutia, D-Commerce, that would authorize fines for executives who fail to disclose corporate fraud.
“California needs more than to learn about corporate wrongdoing after the fact,” Heller said. “We need an early warning system to pre-empt financial fraud from ripping us off in the first place.”
On the Net: Read the bills, AB55 and SB783, at http://www.assembly.ca.gov