The Wall Street Journal reported today that securities firms have a claw back clause that allows them to call back bonuses from people whose screw ups turn out to cost the company big bucks. ok. But Morgan Stanley's contract includes "reputational harm": which sounds like it would include people who tell tales out of school:
Grounds for invoking the provision include "the need for a restatement of results, a significant financial loss or other reputational harm to the Firm or one of its businesses," the memo said. Morgan Stanley's rule applies to 2008 bonuses and cash payouts vesting over a three-year period. The roughly 7,000 employees covered by the policy range from top brass to midlevel workers.
Patterson, Scott. 2008. "Securities Firms Claw Back at Failed Bets." Wall Street Journal (10 December).
5 comments:
Efforts to enforce these "claw backs" etc can provide full employment for the legal profession. Bonuses are sometimes "spent" even before they are awarded. Consider the pressure on a current employee challenging a "claw back" with the present job market conditions on Wall Street and elsewhere. As for defunct firms, it might be like getting blood out of a stone.
"As for defunct firms, it might be like getting blood out of a stone."
Do you mean like the stones making up the palatial digs that may be on a plot in some up-scale town? Or did you have in minid the stones that may be gracing the fingers, ears and napes of some of the wives? False profits posted by false prophets have produced enormouos pay outs for many in the financial industry. Some have lost some of that largesse, but what's left should be taken back.
Aren't these the people who promote free trade and contractual obligations?
I was more interested on the effect on people who still have considerable assets, worrying that spilling the beans on what the corporation was doing could cost them their bonus.
Well that's a good point. There hasn't been the slightest indication of any inclination to begin a criminal investigation of what took place. So what else is new? Not only too big to fail, but also too big to be investigated. Whom ever coined the term brass balls must have been standing in back of that statue of the Wall Street bull.
But who in the government seems interestd to take the closer look that the entire affair requires?
Wasn't Andrew Cuomo making some noise to that effect? Given that Schumer's primary source of funding is the financial industry,
what is the likelihood of Cuomo, a NY Democrat and maybe the front runner for HC's Senate seat, really following his initial inclination to take a closer look?
dream on!
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