After scandals at Enron Corp. and WorldCom Inc., the nation was outraged: Top management was not always working in the best interest of employees or shareholders. Certain rotten apples had stolen hundreds of millions of dollars putting their own gain above those to whom they owed a fiduciary duty. A degree of deception was always involved. To try to prevent this from happening again, Congress enacted the Sarbanes-Oxley Act.

But what fiduciary obligation do shareholders have to a company, its managers and its employees? In this issue, Treasury & Risk writer Duncan Wood documents how hedge funds are using deceptive tactics to conceal ownership in targets or acquirers in major M&A deals. The purpose is to block or push through mergers against the interests of the company in which the hedge funds control a significant equity stake. How can this behavior be beneficial for the markets, shareholders, employees or even the consuming public?

To me, that answer is clear: It is most assuredly against their best interest. Owning shares should put skin in the game. That's why companies are encouraged to give their executives shares; there is a hope that they will then put the company's interest ahead of, or at least equal to, their own. But many of these hedge funds have hedged their downside and now can basically only be winners.