Occupy Wall Street gets CME Group’s attention…

November 10, 2011

Occupy Wall Street, David vs. Goliath? (2/37)

We’ve observed before that the lawyers drafting Securities and Exchange Commission filings can be a little slow to adopt the latest trends, or adapt to the latest cultural developments — see our January post on Wikileaks in the filings, for example, or Michelle’s look at “double-dip” fears in September last year. So when something starts cropping up in the filings, you know it has truly arrived, at least on some level.

And so it is with Occupy Wall Street, the quirky demonstration against corporate misdeeds, greed and inequality that has spawned parallel protests and spoofs across the country, as well as a bunch of smart, and not-so-smart, signs. (The funniest moment so far, as brought to us by the Canadian Broadcasting Corporation: Occupy Whitehorse has become a “virtual occupation” with the onset of winter — propane doesn’t come cheap, after all.)

As far as we can tell, Occupy Wall Street made its SEC-filing debut yesterday, at least by name, in two separate filings. The first, in an 8-K from Strategic Hotels & Resorts (BEE) — a $943-million market-cap real-estate investment trust that concentrates on luxury hotels — landed on the SEC’s virtual desk a few minutes before noon. More on them in a moment.

The second instance came not two hours later, when CME Group (CME) filed its 10-Q. CME Group, of course, runs the Chicago Mercantile Exchange, the Chicago Board of Trade and the New York Mercantile Exchange. So it’s not surprising that it would take a dim view of the protests in New York’s financial district and see itself as a potential target of any nefarious foes of the financial system.

In disclosing a new risk factor for investors to consider, the company warns that “Our role in the global marketplace may place us at greater risk for a cyber attack and other cyber security risks.” It continues:

“In connection with the continued economic uncertainty, groups such as Occupy Wall Street and Anonymous, have targeted the financial services industry as part of their protest against the perceived lax regulation of the financial sector and economic inequality.”

The filing then goes on to explain how Anonymous — the online organization perhaps best known for retaliating against businesses that cut off financial and other support for Wikileaks — “called on its supporters to launch a ‘distributed denial of service’ attack to overwhelm website traffic on NYSE Euronext’s external Web site,” succeeding in causing a “brief outage.” The disclosure concludes,

“While we have no evidence at this time that we are a specific target of a cyber attack, our role in the global marketplace places us at greater risk.”

We’re not sure if CME really means to lump Occupy Wall Street together with Anonymous so indiscriminately, or if it’s a kind of rhetorical sleight of hand. For our part, we haven’t heard of any Occupy Wall Street-linked cyber-attacks — beyond suggestions that Anonymous members supporting the movement might try to hack the New York Stock Exchange — and to our eye the two groups seem pretty different, except perhaps for a penchant for pseudo-revolutionary sloganeering and a generally anti-corporatist attitude.

Strategic Hotels seems to have had a more practical and indirect reason for addressing Occupy Wall Street, and did so in response to an analyst’s question. In an accompanying transcript of the company’s quarterly results, Enrique Torres, an analyst with Green Street Advisors, asks:

“Laurence, if I look at the headlines, I see a lot of corporations having now to balance between some job cuts and then their budgets for rewards spending. In addition, you also see the Occupy Wall Street headlines. Combining these two elements, what do you think the perceived risk is of a revisit or return of the AIG effect on corporate luxury spending?”

You’ll recall that American International Group (AIG) drew buckets of scorn from lawmakers after feting a hundred advisers at a luxury resort in California not long after securing a federal bailout. The backlash led other companies to rein in their own travel and entertainment efforts — at least for a little while; it looks like even AIG is back at it, according to Bloomberg News. Strategic Hotels’ chief executive, Laurence Geller, says he’s heard “no noise about it, no rumblings” either “politically” or “at the corporate level.” Companies are being a little more careful about appearances, but Geller suggests it’s not a problem:

“It’s got to do with prudence, given the headlines. So instead of a divisional president making his decision, it may need a signature from a group CFO or group COO, for example, but that has had no negative impact on it at all.”

In any case, the two filings mark a milestone of sorts, both for Occupy Wall Street and for the SEC.

Image source: Tony the Misfit via Flickr

Data source: Morningstar Document Research

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