A Failure of Disclosure
posted by Michael WatermanMonday, September 15th, 2008
Like many of us with money in the market, I tuned into CNBC this morning to assess the damage after reading about all the turmoil over the weekend. Jim Cramer said something that caught my attention. When asked what brought about the current environment of a bankrupt Lehman Brothers, the problems at AIG and the impending sale of Merrill Lynch, he did not say is was a failure of regulation or oversight or law.
He said it was a failure of disclosure.
The primary reason that Lehman was unable to find a buyer, said Cramer, was that it had massive amounts of debt and other obligations that the market did not know about. And once this information came out they were cooked.
From a public trust point of view it does not matter what business you are in or what size you are. What matters is that you are transparent in all your actions and that you effectively communicate them to all stakeholders.
It ought not take the demise of a major American financial institution to remind us in the business of communication how critical this is, but it certainly makes the point.
September 18th, 2008 at 10:24 am
Great post Michael.
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