August 27, 2002
Outside Counsel
Mr. Grasso, Chair of the New York Stock Exchange, forgot to tell anyone he owned stock as a director of Computer Associates, International. Well, actually, CAI's lawyers advised him he didn't need to report it.
If one is required to make these public disclosures, the determination to do so should not be made by the entity that has an interest in non-disclosure. Former SEC Chair Ruder (and now professor of law at Northwestern) says:
"The average outside director would not be inclined to call on his own counsel to find out" if the SEC reports were necessary, said David Ruder, a professor at Northwestern University School of Law and former SEC chairman. "You'd rely on the advice of company counsel."
Of course it's easier for the company to tell you if you're required to file; however, easier is not always better [do I really need to pontificate on the potential conflicts of interest?].
Besides, is the NYSE Chair
really an average outside director?