At my business school they taught us about agency costs instead. If executives create odd ownership structures, I imagine the market should discount the stock price of their company.

Control without personal ownership is what I thought management structure is supposed to avoid.

Bill,
Are you sure you have accurately portrayed New York law when you say that Greenberg had "every legal right" to transfer the shares? I dont share your certainty, and I have litigated fraudulent transfer issues.

I knew I would start something here as soon as I published this article. I'm sure there are 10,000 lawyers who agree with Josh -- and those are the ones who belong you know where, according to an old Tom Hanks joke in "Philadelphia" (1993).

Just joking -- although I do have my eye on a suitable length of chain. :-)

Litigator Josh would also have to admit that proving fraud in these transfers (or other matters) is very difficult.

Years ago, a group of four of us invested $330,000 in personally and product-secured debt to a technology entrepreneur who immediately transferred all the money to a loan to his wife, and then from her to their children in another country. He and his wife (who also worked in the business) then declared personal and business bankruptcy.

I quickly gave up trying to chase our money after a single meeting with the trustee in bankruptcy -- an elderly man who happened to be the dean of Toronto's bankruptcy professionals. He read me the riot act, but I wasn't laughing. It is truly upsetting to see how easy certain people can pull off fraud and get away with it.

In the case of the person who defrauded us, he moved his office and manufacturing down a couple units in the same business park -- same main address -- and put new stickers on his product literature (same products and same brochures) -- that had the new building number and a corporate name that had changed only by his adding a single word. And his new inventory -- you guessed it -- was paid for by the "secured instrument" he signed in order to obtain our funds. That instrument btw was prepared by one of my associate investors, a man who happened to be the top lawyer in a large downtown Toronto law firm specializing in securities law.

And I (and he) thought it was a black and white case of fraud! What did the judge say? (I paraphrase:) "There is nothing 'black and white' in law.

So, I say, if you have deeper pockets and more friends than Hank Greenburg, then go for it. That's how the lawyers win.

A few years ago, I dealt extensively offshore, and one of my associates was a well-known U.S. lawyer who has published about 100 books on the subject of personal asset protection, and the use of trusts; I'm sure he finds anything I had to say in this article to be well thought out, and not inappropriate.

That's not to say, I'm right. I just have an opinion, like you, and mine has been formed after experiencing both sides.

Bill,

I have been out of the practice of law for over a year, but my feeling as of the time I left (which I think still continues today) is that it is a very dangerous time to be a corporate executive accused of wrongdoing. Martha Stewart, Frank Quattrone and Bernie Ebbers have all recently been convicted of crimes requiring proof of intent -- and those were criminal actions requiring a far higher standard of proof. It simply is a different world for executives than it was four years ago, and is far worse in the U.S. than Canada or Europe.

This of course does not undermine your original point about protecting assets. It does, however, suggest that such measures be undertaken as early as possible rather than waiting (as Greenberg did) until problems were full blown.