US computer companies have backed awawy from predicting their product strategies and future directions because of a Californian vote on 5 November.
Residents there will be invited to vote for a a clause in the Retirement Savings and Consumer Protection Act, called Proposition 211, which will make senior executives in large corporations personally responsible for any fraudulent conduct, whether or not they had anything to do with swindles. The clause also means civil fines for individuals with money paid back to individuals.
That has caused most large computer companies which have reported results in the last week to omit statements in recent financial accounts that give forward forecasts, in case senior executives are subjected to a flood of court actions from would-be litigants, accusing them of misleading shareholders.
According to an action group called the Citizens for Retirement Protection and Security, white collar crime costs Americans over $100 billion a year. Securities fraud is the largest cause of crime and one survey from a US organisation called the Journal of Business Ethics claimed that a large percentage of business professionals were prepared to commit fraud by understating write-offs that bite into company profits.
The latest twist in the Proposition, which is hotly criticised by large US corporations, is that chip company AMD cancelled an analysts' meeting scheduled for tomorrow, 31 October. The reason it gave was that it could subject the company to an increased risk of what it termed "frivolous" actions by shareholders.
One analyst at a major firm who declined to be named, said: "This is plainly ridiculous. A year ago the industry was more predictable. Last year Intel could forecast ahead with some certainty."
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