Voting for Failure

The $WSJ reports:

"Private investment firms have found a simple way to profit from the workings of public companies: Borrow their shares, and then swing the outcomes of their votes.

In some cases, the strategy has allowed speculators to gamble that a company's stock will drop, and then vote for decisions that will ensure that it does -- without their ever having to own any stock themselves."

So I guess this would be like a foreign investor betting that the U.S. economy will tank, and then getting control of a large number of votes in the next election and using these votes to help get Al Sharpton elected president.

The obvious solution is not for government to do anything but for private companies to change their own voting rules to stop this from happening. But actually, I wonder if silly governmental regulations are part of the reason that private investors are currently able to subvert corporate democracy.

See more here.