SEC Chair Sets Forth Broad Regulatory Agenda
04/06/2009In a speech to the Council of Institutional Investors on April 6, 2009, Mary L. Schapiro, chairman of the U.S. Securities and Exchange Commission (SEC), outlined an ambitious regulatory agenda under consideration at the SEC, including a new proposal to permit shareholders access to a company’s proxy materials to nominate director candidates for the boards of public companies. The text of Schapiro’s speech is available here.
New rule proposals being considered by the SEC that would affect SEC-reporting companies include the following:
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Proxy access (a proposal is expected in May 2009), which Schapiro stated should be designed to provide stockholders a meaningful opportunity to nominate directors and ensure that any procedural requirements for access are rational and not a means to thwart effective investor participation
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Additional disclosure concerning the experience, qualifications and skills of director nominees and about a board’s reasons for choosing their particular leadership structure—whether that includes an independent chair, a non-independent chair or a combined CEO/chair
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Additional compensation disclosure, including about how a company manages risks, both generally and in the context of setting compensation and about a company’s overall compensation approach, beyond decisions with respect only to the highest paid officers, as well as compensation consultant conflicts of interests
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Limitations on short sales in a down market (expected to be proposed this month)
With regard to the regulation of market professionals and intermediaries, Schapiro identified a number of areas in which the SEC will consider new regulation, including the following:
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Requiring those with custody of client assets to undergo an annual third-party audit, on an unannounced basis, to confirm the safekeeping of those assets
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Harmonizing the responsibilities of investment advisers and broker-dealers, so that investors who use either can expect a uniform level of professionalism and accountability
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Mandating that certain investment advisers have third-party compliance audits
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Registering hedge fund advisers and potentially the hedge funds themselves
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Requiring more disclosure from credit rating agencies, including potentially the assumptions underlying their methodologies, fees received from issuers and factors that could change ratings
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Overseeing the credit default swap market, including new reporting and recordkeeping rules
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Enhancing standards applicable to money market funds
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Providing investors in municipal securities with the similar disclosure and investor protections as are provided to investors in other securities
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Enhancing disclosure around asset-backed securities
In response to questions, Schapiro also stated that the SEC will soon vote on a measure introduced by the New York Stock Exchange (NYSE) that would prohibit brokers (under NYSE Rule 452) from casting director-election votes on behalf of investors that don’t vote themselves.
