So, Allstate was supposed to hide this from the SEC? They didn’t name the employees and it seems they had to disclose the incident in their official filings or risk sanctions from the SEC. There must, I hope, be more to this story. Otherwise, it seems like a horrible verdict that enriches these employees who apparently committed fraud and stole from the company, based on what’s in this article.
The Chicago Tribune has a much more in depth article about what these employees were doing. Basically their bonus structure was set up in a way that provided incentives for buying low and selling high, regardless of the effects of the overall portfolio. So, they were doing just that – buying low and selling high, regardless of whether or not it was beneficial to the overall portfolio. Allstate set up that system and then basically said that when the employees followed it they lost the portfolio money and fired them for cause. There wasn’t anything stolen from the company, the employees just exploited their bonus structure to their maximum benefit at the detriment of the portfolio they were managing. Allstate should have blamed themselves for having such a system in place and offered the employees a buyout when they shut down that division of the company and they would have saved themselves from this verdict.
In reading some other things, it appears that part of what the fired employees allege is that when they were skimming, they were following what high level executives also did and these employees were thrown under the bus. I am not sure of the merits of that, but apparently the jury must have believed it and…
So, Allstate was supposed to hide this from the SEC? They didn’t name the employees and it seems they had to disclose the incident in their official filings or risk sanctions from the SEC. There must, I hope, be more to this story. Otherwise, it seems like a horrible verdict that enriches these employees who apparently committed fraud and stole from the company, based on what’s in this article.
Apparently, they were not in such good hands, were they?
The Chicago Tribune has a much more in depth article about what these employees were doing. Basically their bonus structure was set up in a way that provided incentives for buying low and selling high, regardless of the effects of the overall portfolio. So, they were doing just that – buying low and selling high, regardless of whether or not it was beneficial to the overall portfolio. Allstate set up that system and then basically said that when the employees followed it they lost the portfolio money and fired them for cause. There wasn’t anything stolen from the company, the employees just exploited their bonus structure to their maximum benefit at the detriment of the portfolio they were managing. Allstate should have blamed themselves for having such a system in place and offered the employees a buyout when they shut down that division of the company and they would have saved themselves from this verdict.
In reading some other things, it appears that part of what the fired employees allege is that when they were skimming, they were following what high level executives also did and these employees were thrown under the bus. I am not sure of the merits of that, but apparently the jury must have believed it and…
I wouldn’t worry too much about Allstate, they have plenty of lawyers and aren’t afraid to use them.
Your in good hands with Allstate, but sometimes you only get the finger..