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Blowing the whistle doesn’t pay.
Carl Clark, who was fired from his job at Georgeson Inc. after exposing a scheme to sell confidential corporate voting data, stands to receive little or no reward for helping regulators crack the case.
Yesterday, Institutional Shareholder Services, the largest shareholder advisory firm, agreed to pay $300,000 to the Securities and Exchange Commission to settle charges that it failed to stop the improper sale of confidential voting data over a five-year period.
In January 2012, Clark sent a letter to the SEC through its newly launched whistleblower program, alleging that an employee at ISS, Brian Zentmyer, had been selling clients’ confidential voting data to proxy advisory firms, including his co-worker Michael Sedlak at Georgeson, in exchange for cash and gifts. In the complaint, Clark said his peers and “senior management at Georgeson,” were aware of the scheme.
The Post broke the story after obtaining a copy of Clark’s complaint.
In June, six months after the SEC was alerted to the scheme, Georgeson fired Clark, Sedlak and one other long-term employee.
Under the SEC’s enhanced whisteblower program, tipsters can reap up to 30 percent of the money collected from a company or its executives — but only when the fine exceeds $1 million.
Yesterday, SEC officials declined to comment on whether the agency is investigating Clark’s firing.
A spokeswoman for Computershare, which owns Georgeson, said she was unaware of any such investigation. She said the SEC’s probe into Georgeson over the scandal is ongoing.
Clark declined to comment and a call to his lawyer, David Marshall, wasn’t returned.
The settlement with the SEC revealed that the vote-buying scheme was even bigger than the one Clark initially described.
The SEC’s order said at least one other ISS employee sold votes to Georgeson. The agency also confirmed Clark’s thesis that his wasn’t the only firm to have done this.
The SEC didn’t name the other proxy solicitation firm that received confidential vote information.
Zentmyer, meanwhile, shared votes of more than 100 ISS institutional shareholders over five years. In exchange, he received $11,500 in sporting event tickets, concert tickets and a plane ticket.
Georgeson also paid for roughly $20,000 in meals for Zentmyer and others at ISS.
In one instance, Zentmyer allegedly told Sedlak, “it will cost you another game,” when asked for confidential voting information.
Proxy solicitation firms like Georgeson hire themselves out to boards seeking to build shareholder support for important corporate votes, like mergers. Knowing how shareholders are leaning can help sway the outcome.
ISS spokeswoman Cheryl Gustitus said two employees besides Zentmyer were let go “for inappropriately accepting gifts.”
“From the beginning, ISS took swift action of its own and also fully cooperated with the SEC to investigate and promptly resolve this matter,” Gustitus said. “We now consider this matter closed.”