We have advance notice on how Catherine Kinney, the President of the New York Stock Exchange, will attempt to justify to the Senate's Environment and Public Works Committee her precipitous decision last month to postpone the listing of Huntingdon Life Sciences on the Exchange.
Ms Kinney made her decision at the last minute in the wake of a garden-variety Animal Rights campaign to stop the listing, and it caught everyone by surprise, including her close colleagues and the HLS executives who had gathered — at the invitation by the NYSE, no less — for a celebratory breakfast.
We also have some an idea about what Dr. Jerry Vlasak will say.
Here's what an MSNBC story suggests we are to expect:
The debate over animal rights protesters’ campaign against Huntingdon Life Sciences, the UK drugs testing company, will reach the US Senate on Wednesday as its environment and public works committee holds a day of hearings into “eco-terrorism”.
But the New York Stock Exchange, which has been criticised for abandoning last month’s planned listing for the company at the last moment, appears set to refuse to offer the reasons for its decision, citing its duty of confidentiality to companies seeking a listing. [My emphasis . . . ed]
I guess the reasons are so confidential, they won't even be shared with the company seeking a listing!
According to testimony by Richard Bernard, the stock exchange’s general counsel, which was published last night, HLS was de-listed [from the London Stock Exchange . . . ed] in December 2000, having been listed since 1989, because it had suffered financial reversals due to “economic terrorism” by animal rights activists.
He added: “Regardless of the cause, given the financial situation in which the company found itself, the Exchange’s rules dictated that the company should be de-listed.”
Mr Bernard’s testimony says the exchange decided in August that the company could re-list, after going through the usual processes for assessing its eligibility. He said: “Following that announcement, reactions from persons associated with member organisations and others focused our attention on information that we should have considered in determining the advisability of listing Life Sciences Research’s common stock on the Exchange.”
He added that the decision was taken to postpone the listing, hours before it was due to take place “to provide an adequate opportunity for us to evaluate the information”.
This doesn't pass the laugh test . . . if this was the real reason, the NYSE could have engineered a way to postpone the listing without waiting until the 12th hour, and, had it been the real reason, it would have been simple enough for Kinney to say as much when she announced her decision. And then, there's the little matter of her colleagues being entirely caught off balance by her announcement too. As a reminder, this is how Christopher Byron put it:
For the NYSE to have agreed to list Life Sciences shares for trading on the Big Board may have been gutsy, but it was certainly unnecessary. And it was plainly idiotic, having issued a press release announcing that trading would begin on Sept. 7, to invite the company's top officials for a celebratory breakfast, only to inform them, mere minutes before the opening bell, that there'd been a change of plans and the listing would be "postponed" indefinitely.
According to Life Sciences' Chief Financial Officer Richard Michelson, who attended the traditional breakfast, the bombshell news of the exchange's about-face was delivered to the group by Kinney herself, who cleared her throat, looked at the Life Sciences brass seated around here and declared, "Well, there's no way to sugarcoat this, but the listing will not be taking place today. It is being postponed."
Once her stunned listeners were able to gather their thoughts, they began asking her to explain why. Had the Big Board found some skeleton in the company's closet? Some financial irregularity? Anything?
No, explained Kinney. It was nothing like that.
Well, what then?
"[Kinney] just wouldn't say," Michelson said. "She kept questioning us about SHAC and the animal-rights people," he said. "But she simply wouldn't say why the NYSE had changed its mind."
A few minutes later, Kinney summoned NYSE PR boss Margaret Tutwiler, a former chief press spokesperson for the U.S. State Department in Washington, and ex-Undersecretary of State for Public Diplomacy in the Middle East, presumably someone who could be counted on to keep a secret.
But not even Tutwiler knew what was up. When she came in and sat down, she seemed totally clueless as to why she was even there, and had to be briefed by Kinney as to why she had been summoned at all: To prepare a press release announcing that the Life Sciences listing was being postponed — a subject she seemed to know nothing about.
TWO days later, I con tacted a member of the board of directors who agreed to speak if not identified by name. The member said no one on the board was informed, adding, "Security is the biggest hot-button issue imaginable at the exchange, and I cannot believe something of this magnitude would have happened without the board being briefed."
At week's end a wall of silence had descended around the exchange, with officials refusing to answer questions of any sort regarding the Life Sciences matter, from The Post or indeed any other media outlet.
The stonewalling even extended to the NYSE's seeming defiance of a U.S. Senate Committee, which early last week opened its own probe of the Big Board's behavior. Sources in Washington said the committee had been unable to get the exchange to even return phone calls.
[ . . . ]
It's hard to reconcile Mr. Byron's heated report with the bland explanation offered by Mr. Bernard, the Exchange's general counsel, that they (the NYSE) had had concerns since August and needed to investigate further . . . what useful purpose would it serve to not inform HLS that the Exchange were having second thoughts, and what useful purpose would it serve to not give HLS a chance to respond to whatever the concerns were? What useful purpose did it serve to spring such a surprise on the HLS people at in the way it was done and at the 12th hour?
Back to the MSNBC report.
Mr Bernard describes the situation as “unfortunate” and says the exchange regrets the circumstances, as the publicity “is quite at odds with our policy of affording applicants a confidential listing evaluation”.
Say, what? Confidentiality is apparently so important that Kinney evidently didn't inform the Exchange's board of directors; the Exchanges PR boss Ms Tutweiler; or HLS that the listing would be postponed, much less the reasons why!
Even if you buy Mr. Bernard's highly implausible yarn, you have to wonder why Kinney didn't handle the PR more adroitly. She must have been aware that rumors were flying about that she'd caved to AR threats, and she chose not to address them at all, to HLS (who certainly deserved better), or to the public (not that the mainstream media was all that interested . . .).
Rumors of that sort undermine confidence in leadership, and when that happens, confidence in the institution itself is undermined. Kinney is the Exchange's steward, and should have moved heaven and earth to dispel such destructive rumors, to provide something stable for the restless to calm their spirits and rebuild their confidence.
She apparently did nothing of the sort, and let the destructive rumors own the day. She's either wretchedly incompetent or believes she's unaccountable. I'll leave it to you to decide which is worse.
My take on this is pretty straight forward: Kinney cut HLS off at the knees when she panicked; she didn't try initially to dispel the rumor that she caved to AR intimidation because the rumor was correct; and now that she's been dragged kicking and screaming to a Senate hearing to account for her actions, she and Mr. Berhard have come up with a tale that they hope will be believable enough to let them weather the storm.
Again, from Mr. Byron (op cit):
SHAC also maintains a Web site that lists the names, addresses and phone numbers of all Life Sciences' clients and suppliers worldwide, along with links to the Web sites of SHAC chapters throughout Europe and Asia.
The site's home page includes a running tally of the latest attacks by activists on the company and its business partners, and offers "how to" advice for, among other things, making harassing phone calls from untraceable phone numbers. In recent weeks, the SHAC Web site has been listing the direct-dial office phone numbers and e-mail addresses of dozens of the NYSE's top officials. [My emphasis . . . ed]
So — did Kinney reverse course because of legitimate concerns about HLS's financial situation, or because she was intimidated?
I know what I think . . . you make your own call.
Dr Jerry Vlasak, the Los Angeles heart surgeon who has taken a leading role in the protests against HLS, will also testify to the committee. In an interview with the Financial Times, he was unapologetic for the group’s campaign.
Referring to Catherine Kinney, the exchange’s president, he said: “If you look at the financial information about Huntingdon Life Sciences, it’s amazing that the NYSE would have even considered listing them.
If Kinney and her minions believed HLS had a shaky financial situation, it would have have been easy enough for them to inform the company well in advance of the 12th hour, at the 12th hour, or even in the weeks thererafter. But Kinney et al chose not to break silence until now, and they're saying nothing now they couldn't have said over the past few weeks.
But I don't believe for a minute that there were serious questions about HLS's finances: if they were, why did the Exchange agree to consider them, and, having considered them, why (according to Mr. Byron) did the Exchange issue "a press release announcing that trading would begin on Sept. 7 . . . [and] . . . invite the company's top officials for a celebratory breakfast . . ."?
Whether she decided not to list them because of their financials, whether she decided not to list them because she is opposed to the immoral acts they carry on in their facilities, or whether she was intimidated by animal rights activists we don’t really know, but those are all good reasons.”
Well, there you have it straight from the horses mouth: being intimidated by Animal Rights activists is a good reason for Kinney to reverse course!
I wonder what what the companies listed on the Exchange would say if she simply fessed up: "Sure, I decided not to list HLS on the Exchange, but I had good reason! I was intimidated!"
If Mr. Byron's facts are correct, there just is no good face that can be put on Kinney's actions.
Frankly, she's inadequate to the task and should resign.