SEC Chairman Mary Schapiro considers overhauling rules to help investors
Saturday, July 10, 2010
Securities and Exchange Commission Chairman Mary Schapiro said Friday that the agency could overhaul how shareholders obtain information and make decisions about the management of companies they invest in.
Schapiro said at a conference in Chicago that the agency might require companies to include more information in periodic disclosures to investors. It could also reform the process by which investors vote for who sits on corporate boards.
"We believe investors' interests are served when they can participate productively in the governance of the companies they own," Schapiro said.
First up this Wednesday will be an agency request for public comment on whether it should propose rules to ensure that companies provide their investors with additional information about shareholder votes.
SEC officials want to know whether the millions of votes cast each year supporting and opposing corporate board candidates are being accurately tabulated -- and whether companies are able to communicate effectively with shareholders about when shares may be voted by brokers and mutual funds on behalf of individual investors.
"We are reevaluating all of our corporate filing forms and disclosure requirements, asking ourselves whether the information that is being sought is still relevant," Schapiro said, "or whether another type of information or a different form of presentation would be more meaningful to investors and to the markets."
The measure is part of a broader agency effort to reshape the interactions between companies and their investors. The SEC is also paying a lot of attention to the periodic disclosures that companies make, such as quarterly reports and proxy filings, to see if they can be improved.
The SEC's Division of Corporation Finance, led by Director Meredith Cross, is studying whether companies need to tell investors more about what they're doing to address risks their businesses face.
For years, the SEC has required that companies provide investors with a list of a significant risks the firms face. But companies have not been required to tell investors what they're doing to mitigate those risks. The agency is now considering changing that policy in hopes of persuading companies to think more seriously about the risks they take.
The agency is also moving ahead with a proposal to make it easier for shareholders to team up to nominate directors to corporate boards, an issue known as proxy access. Today, this is very difficult at most companies. The SEC has released a proposal that would let shareholders who have invested in a company for a long time nominate directors.
Corporate America has long resisted expanding proxy access out of concern that investors backed by environmental or union interests would attempt to hijack the board nomination process. And advocates for the nation's business community, such as the Chamber of Commerce, stand ready to sue if there are any weaknesses in the rule passed by the SEC.
The threat of a defeat in court has delayed the agency's effort to pass new proxy access rules, which were originally supposed to be in place for the corporate voting season this past spring.
Schapiro told reporters at the conference Friday that she is now hoping the rules will pass by summer's end.