Bank of America has been in the news lately thanks to the
testimony of six whistleblowers. Those whistleblowers described a corporate culture where bank employees
were encouraged to lie to home owners seeking loan modifications under
HAMP. This same corporate culture incentivized sending files to foreclosure
by paying bonuses to employees who referred at least ten cases in a given month.
Given that we've seen BofA described as "Too Big To Fail"
and "Too Big To Jail," there's a high likelihood that these
revelations will go unpunished by Federal regulators. However, BofA is
a publically-traded company. Its primary duty is to its shareholders.
Those shareholders can hold BofA's executives and Board of Directors
responsible for their actions -- especially if those actions could hurt
their investment in BofA.
According to this
SEC filing, it looks like one group of activist shareholders is looking to do just
that. Finger Interests Number One, Ltd. is seeking answers from BofA's
directors. In its SEC filing, the group discusses some important ideas
for investors seeking long-term growth by investing in BofA. One of those
concepts is brand value.
Brand value is the goodwill generated by a specific brand. Brand value
is one of the key elements that makes trademarks so valuable. When a brand
has high value, it is generally well-known and trusted as a provider of
the services or goods for which it is known. Stories like the whistleblower
story tend to have a negative impact on brand value. Certainly, the bad
press and derision in the blogosphere (I am guilty of this) can affect
people's opinion of the company.
The SEC filing notes that BofA currently has the worst reputation out of
all of the major banks. This may have already had an effect on BofA's
market share -- further damage to the corporate image could also crater
its brand value. Right now, the filing seeks to spur other shareholders
to demand answers from Brian Moynihan and the BofA directors. It demands
that BofA create a corporate culture that is based on honesty and integrity.
If Moynihan and Co. are listening, then they would be wise to take notice.
This group of activist shareholders last acted in 2009. Its actions led
to the separation of the CEO and Chairman positions from each other; three
board members were also sent packing. Here's hoping that they work
their magic again.