Upheaval at the Japan-based Sekisui House has created a worrisome situation for investors, Professor Merritt Cole said in a Philadelphia Inquirer article published on April 10.
Sekisui House, a homebuilder with operations in the U.S. and Australia, is in upheaval after its longtime chairman was allegedly ousted by the company president, who has been cited by shareholder advisory firms for losing $51 million to broker fraud and then concealing the scandal.
Reports by Institutional Shareholder Services Inc. and Glass, Lewis & Co. identify a lack of transparency, control weaknesses and poor risk management at Sekisui House and urge investors to vote against two of the company’s top executives in board elections to be held on April 26.
The reports reveal “a number of breakdowns in corporate governance at Sekisui House, including a lack of mechanisms to identify and communicate risks in business transactions to the board and to insure that investors receive accurate and timely information,” Cole said.
Disparities in the accounts offered by the company’s former chairman and the current president may be “very troubling to U.S. shareholders,” Cole said, adding that independent legal counsel would be able to improve internal procedures and external compliance that would address concerns.
The chair of the Securities Law Practice Group and counsel at Earp Cohn, Cole teaches Securities Regulation as a member of the adjunct faculty. Before entering private practice, he served as branch chief for the Securities and Exchange Commission's Division of Market Regulation.