To: The United States House of Representatives and The United States Senate
Put a rating on bad corporate citizens: "Investing in this company may be bad for your country's ...
Why is it that harmful products have warnings and ratings but harmful companies don't?
Let's take Chase Bank for example. We believe Chase investors need to know what kind of behavior it engages in. Why? Chase admitted that it illegally overcharged and foreclosed on active military families. Chase also was caught breaking laws against working with possible terrorist organizations.*
Here are a few suggested rating factors:
- the company has/has not been reprimanded by Congress in the last 7 years
- the company or its senior managers were/weren't investigated in the last 7 years by any regulatory body like the SEC, the Treasury Department, congressional action, or the DOJ
- the company has/hasn't been fined by regulatory bodies in the last 7 years
- the company or its senior managers have/haven't admitted breaking industry laws
- the company or its senior managers have/haven't settled or been involved with any suit with the US Government within the last 7 years
- the company does/doesn't donate 1% or more of its net profits or annual workforce manhours to recognized charities
These warnings should appear on the front cover of the company's annual report, in their prospectus, and in stock analyst reports. For online investors, a rating dialog box (with links to evidence) must be read before investors can purchase the stock or mutual fund.
The ratings should be on a simple A+ to F- grade scale. The ratings should be generated by a simple algorithm that could be written by volunteers. Alternatively, rights to the rating process could be sold to a third-party organization such as Morningstar. A company with no history of positive or negative actions should receive a grade of B. The public should be able to flag ratings as inaccurate during the investing process.
We believe investors deserve to know where their money is going. Please help us reward good companies and penalize bad ones.
* http://www.today.com/id/41043127/ns/today-money/t/overcharges-soldiers-mortgages-investigated/#.UgkQZJI3u84 and http://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20110825.aspx
Let's take Chase Bank for example. We believe Chase investors need to know what kind of behavior it engages in. Why? Chase admitted that it illegally overcharged and foreclosed on active military families. Chase also was caught breaking laws against working with possible terrorist organizations.*
Here are a few suggested rating factors:
- the company has/has not been reprimanded by Congress in the last 7 years
- the company or its senior managers were/weren't investigated in the last 7 years by any regulatory body like the SEC, the Treasury Department, congressional action, or the DOJ
- the company has/hasn't been fined by regulatory bodies in the last 7 years
- the company or its senior managers have/haven't admitted breaking industry laws
- the company or its senior managers have/haven't settled or been involved with any suit with the US Government within the last 7 years
- the company does/doesn't donate 1% or more of its net profits or annual workforce manhours to recognized charities
These warnings should appear on the front cover of the company's annual report, in their prospectus, and in stock analyst reports. For online investors, a rating dialog box (with links to evidence) must be read before investors can purchase the stock or mutual fund.
The ratings should be on a simple A+ to F- grade scale. The ratings should be generated by a simple algorithm that could be written by volunteers. Alternatively, rights to the rating process could be sold to a third-party organization such as Morningstar. A company with no history of positive or negative actions should receive a grade of B. The public should be able to flag ratings as inaccurate during the investing process.
We believe investors deserve to know where their money is going. Please help us reward good companies and penalize bad ones.
* http://www.today.com/id/41043127/ns/today-money/t/overcharges-soldiers-mortgages-investigated/#.UgkQZJI3u84 and http://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20110825.aspx
Why is this important?
Like cigarette warnings from the Surgeon General, there should be ratings on stocks and mutual funds of lawbreaking companies. Investors need to know when they're about to support a company with a record of breaking the law and endangering the public and the economy.