After investor confidence was shaken to its core in the wake of corporate fraud at Enron, WorldCom, and other companies, it received a much-needed boost by the 2002 passage of the Sarbanes-Oxley Act (SOX). With the Act’s fourteenth anniversary on the horizon, Reda Bedjaoui, CEO of Redbed Investments LLE and recognized thought leader on multi-sector international investing, reflected on the significance of SOX in the U.S. and around the globe. “The legislation provided a much-needed course correction in the corporate governance arena,” he noted. “SOX served to hold the CEOs of publicly-held companies accountable to their shareholders and ensured that public accounting firms would operate with a high standard of impartiality.”
Reda Bedjaoui connected the dots between SOX and similar regulatory legislation in other parts of the world, “That same year, corporate governance codes were enacted in Canada, Germany, and South Africa, with France, Italy, Australia, Japan, and The Netherlands following suit within the next few years.” The investing expert asserted that by shoring up corporate governance requirements, these measures created a paradigm shift within publicly traded companies that continues to this day. “Senior management and board members had a wake-up call,” Bedjaoui notes. “They gained a new appreciation that their fiduciary duty was to their shareholders, who are the de facto owners of the companies.” Still, according to Reda Bedjaoui, the Great Recession of 2008 revealed that some corporate governance principles were on shaky ground, underpinnings that 2010’s Dodd-Frank Wall Street Reform and Consumer Protection Act sought to stabilize.
“Executive compensation often bore no relationship to a company’s health or profitability, so Dodd-Frank gave shareholders an important – though non-binding – ‘say on pay’ and required that compensation committees be independent,” he pointed out. “In the same vein, if those in the executive suite misrepresent the company’s financial well-being, the law says they can be forced to return their compensation.”
The expert investor notes that, today, companies with exemplary governance go beyond reactively complying with SOX, Dodd-Frank, and other regulatory mandates. “Successful corporate governance initiatives proactively tackle the concerns of both shareholders and stakeholders,” maintains Bedjaoui, noting that stakeholders can include everyone from employees to vendors to community members. “Internal accounting controls and accurate financial statements are critical to investors, but factors like environmentally sustainable practices, a mission-driven corporate culture, and an executive team that leads by example satisfy a range of stakeholders.” When companies excel in all of these arenas, they deliver value to shareholders. According to Bedjaoui’s conclusions, “The importance of corporate governance – which includes sound risk management and regulatory compliance – is what makes near- and long-term profitability possible.”
For more than a decade, Reda Bedjaoui has anticipated trends in commodities trading. His expertise in corporate governance, risk management, and regulatory compliance has enabled him to manage commodity risk exposure and provide governance guidance to a number of international companies. Mr. Bedjaoui’s insights grow out of his command of international law, as well as his global business and real estate successes. Raised in Paris, France, Mr. Bedjaoui studied at Université de Montréal, where he was accorded a Bachelor in Law degree. He furthered his education at Hague Academy of International Law in the Netherlands, and then was admitted to the Bar of Quebec, Canada (Montreal Section) in 1995. He honed his practice of commercial law, corporate law, and international arbitration in positions at recognized law firms in both Montreal and Paris.
Reda Bedjaoui — Offers Expert Advice for Novice Hedge Fund Investors:
Reda Bedjaoui — Attended NAAIM 2016 Uncommon Knowledge Conference: