Corporate Governance

SEC Favors No Proxy Access

By Fei-Lu Qian

In the ongoing battle to get more shareholder access to corporate proxies, the SEC has just sent another blow to investors. According to a media report, the SEC sent dozens of ?no action? letters to number of public companies, including Bear Stearns, JPMorgan Chase & Co., E-Trade Financial, Croghan Bancshares and Kellwood Co., that the agency will not stand in the way of companies that deny shareholders from recommending various proxy proposals. For instance, the SEC?s staff letter to Bear Stearns, it concluded that the staff ?will not recommend enforcement action to the Commission if Bear Stearns omits? from its proxy materials a shareholder?s proposal requesting the company to provide a report to shareholders discussing its potential financial exposure as a result of the mortgage securities crisis.

Unfortunately, this latest action by the SEC should not be a surprise to investors based on the SEC?s prior decisions on this critical issue of granting shareholders more access to proxies. Indeed, according to this article, the SEC voted three to one, along party lines ?against its own proposal to allow shareholders who own 5 percent of a company to formally suggest bylaw changes related to director nominations.?

?We?ve expected this response,? said Richard Ferlauto, director of pension investment policy for American Federal of State, County and Municipal Employees.

Full post as published by PomTalk on February 13, 2008 (boomark / email).