Thursday, April 28, 2005

Privacy and security are governace issues: ChoicePoint CEO Won't Discuss Breach

I would have thought that issues affecting share price and the future of the company are fair game at an annual general meeting, but the organizers of ChoicePoint's AGM didn't think so. A question about the high-profile breach that are leading to regulation of their industry were considered out of order, according to ABC News and the Associated Press:

ABC News: ChoicePoint CEO Won't Discuss Breach:

"NEW YORK Apr 28, 2005 — ChoicePoint CEO Derek Smith refused to answer questions on Thursday about the security breach that allowed criminals to access the company's database, telling shareholders at the company's annual meeting that the matter was the subject of pending litigation.

"As we have previously disclosed, the company is continuing to investigate the recent fraudulent data access and other matters," Smith told about a dozen shareholders at the Waldorf-Astoria Hotel in Manhattan.

The Alpharetta, Ga.-based company announced in February that the personal information of 145,000 Americans may have been compromised when thieves posing as legitimate small business customers gained access to its database. Authorities say at least 750 people were defrauded in the scam. The scandal has fueled consumer advocates' calls for federal oversight of the loosely regulated data-brokering business, and Capitol Hill hearings are likely soon on the issue.


Smith and ChoicePoint President Douglas Curling earned $16.6 million from ChoicePoint stock sales after the company learned last fall of the security breach and before that was made public on Feb. 15.

During Wednesday's brief meeting, the shareholders voted in four new directors and approved the appointment of Deloitte & Touche as the company's independent auditor.

After reading prepared remarks, Smith answered written questions submitted by shareholders. A question relating to the security breach was deemed inappropriate and was not read aloud...."

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