US - Pension fund group CtW Investment Group has demanded an explanation from Wachovia Corporation's board of directors' risk committee on what action it took to protect shareholders from excessive exposure to mortgage-related risk over the past two years.
CtW works with pension funds sponsored by unions affiliated with Change to Win, a coalition of unions representing nearly six million members, to enhance long-term shareholder value through active ownership.
These funds, together with public pension funds in which CtW union members participate, have about $1.4trn in assets and are substantial long-term Wachovia shareholders.
Patterson said: "Wachovia's failure to manage risk destroyed one third of the firm's value last year, and shareholders have lost 19% more so far this year.
"Today's announcement makes it clear that the bad news isn't over. This board signed off on management's decision to substantially increase exposure to mortgage risk in 2006.
"This proxy season, shareholders will demand accountability, starting with the individual directors most responsible."
CtW sent letters to directors Dona Davis Young, Donald M. James, Van L. Richey, and William H. Goodwin to ask them to explain in detail what they did to understand the company's exposure to mortgage-related risk and how they satisfied themselves that management was properly controlling such exposure.
All four directors will stand for election this year, and CtW said, if the members of the risk committee failed to provide a convincing account of their oversight activities over the past two years, it would recommend that shareholders withhold support from Young, James, Richey, and Goodwin.
Last week, the CtW Investment Group called on five Citigroup directors and four Merrill Lynch directors to explain what they did to protect their company's shareholders from excessive mortgage-related risk over the past two years.
Wachovia Corporation provides commercial and retail banking, and trust services.
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