Shareholder rights: Pennsylvania bails out Sovereign Bancorp

Investor groups and corporate governance specialists view the February passage by Pennsylvania’s state legislature of a law specifically aimed at protecting Sovereign Bancorp from activist investor demands as a setback for all US shareholders. For some, the fact that Pennsylvania governor Ed Rendell signed the law solely to protect Sovereign, and is now concerned that it might prompt shareholder disputes at other companies, only makes the situation worse. “From a public policy perspective, this is terrible, and smacks of favouritism and special interest,” says Beth Young, senior research associate at The Corporate Library, a corporate governance research firm.