Here's the first report on the NYSE's response to questions by the Senate Committee on Environment and Public Works on why, at the very last moment, Catherine Kinney, President of the NYSE, precipitously and without warning "postponed" the Exchange's decision to list Life Sciences Research, Inc, the parent company of Huntingdon Life Sciences.
As you might expect, the NYSE's testimony is distinctly non-specific:
WASHINGTON, Oct 26 (Reuters) - The New York Stock Exchange told a U.S. Senate committee on Wednesday that it is still reviewing the application of an animal-testing company whose listing was postponed last month, minutes before it was slated to start trading.
"Still reviewing," of course, is their "out," and I suspect the NYSE will ultimately list HLS.
Ms Kinney's use of the word "postponed" — probably selected more instinctively out of haste than thoughtfully out of prudence — gave her a little wiggle room and bought an opportunity for the Exchange's cooler heads to craft a reason to undo what Ms Kinney has wrought.
But even if HLS is finally listed, that does not excuse Ms Kinney's precipitous decision of September 7, one which defies rational explanation other than that she acted out of fear, fear that she would be a target of an AR "direct action."
You don't want the President of the NYSE so easily intimidated into compliance by any special group, much less an extremist one.
Richard P. Bernard, general counsel for the NYSE, apologized to Life Sciences Research Inc.
for the timing of the postponement, which some said came after pressure from animal rights activists.
"We got our cart before the horse," he said.
Bernard did not explain the reasoning behind the postponement, saying that confidentiality rules prevented him from doing so. [My emphasis . . . ed]
[ . . . ]
It wasn't just the timing of the announcement, it was the fact that Kinney's announcement was precipitous and caught everyone — NYSE people (the NYSE Board of Directors and its PR chief) and HLS people — completely unawares.
Keep in mind that the NYSE had advertised publicly that the listing would be announced on September 7, and that they had arranged a celebratory breakfast to honor the listing. Everyone thought the listing was a "go" right up until Ms Kinney unilaterally pulled the plug.
Confidentiality is a legitimate wall, but one used in this case to shield President Kinney from being held accountable for her bizarre and erratic behavior the morning of the event, behavior that Christopher Byron documented so well.
Mark Bibi, general counsel for Life Sciences, testified at a Senate Committee on Environment & Public Works hearing on Wednesday that he met with NYSE officials on September 7 and that they spoke only about the animal rights campaign from the group Stop Huntingdon Animal Cruelty (SHAC).
"It was patently clear to me that the only reason the NYSE postponed our listing was because of concerns about the SHAC campaign," Bibi said. [My emphasis . . . ed]
[ . . . ]
What Kinney did September 7, the day HLS was to be listed, was bad enough: she panicked and made a unilateral decision at the last moment out of fear. But what she's doing now — by not resigning — is inexcusable.
The honorable thing for her to do is to resign.
Bibi said there has been a clear negative impact from the NYSE's postponement.
On the day before the postponement, shares of Life Sciences closed at $17.50 per share on the Over the Counter Bulletin Board. The shares have since traded as low as $8 per share.
The stock closed on Wednesday at $12.25 per share.
The honorable thing for Ms Kinney to do is to resign. No company should have to worry about the erratic behavior of the likes of Ms Kinney being in charge of an institution that they and their shareholders depend on.
"The investment community is losing faith in the stock exchange doing the right thing," Bibi said.
Senator Frank Lautenberg told Bernard during the hearing that it is within the Senate's power to subpoena NYSE records, but did not say it would do so.
He questioned if there is any reason not to list Life Sciences.
"The exchange has the right, under rules approved by the SEC, to bring in other factors to determine a listing," Bernard said.
The exchange may have the right to bring other factors to the table, and certainly should have it.
But power that great should be used with extreme care. Ms Kinney evidently exercised her power recklessly, out of fear of an AR "direct action." In doing, she so provided incentives to those — Animal Rights activists and any other extremist group — who are inclined to use violence, coercion and threats to get their way.
Nor has her subsequent behavior assuaged concerns that Ms Kinney was panicked into her decision by fear: all the evidence points in one direction, and one direction only.
The long and the short of it is this: Ms Kinney allowed herself to be stampeded by fear into a horrible decision that can only be a beacon of hope to each and every extremist group that wants to dictate the terms of listing on the Exchange . . . Or so I would argue.
A predecessor of Life Sciences, Huntingdon Life Sciences Group plc, was previously listed on the NYSE for 12 years, starting in 1989. It was delisted in December 2000 for failure to meet the exchange's financial listing requirements.
At the time, the company indicated that the financial downturn was due to "economic terrorism" by animal rights activists, Bernard said in his testimony.
And how galling for the courageous Mr. Brian Cass, director of HLS, who was beaten by three SHAC thugs wielding pickax handles and yet has not flinched from standing up the AR extremists: now, he has had to watch the spectacle of Ms Kinney cave so easily!
What can I say? I think Ms Kinney should resign.