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Last week, the Supreme Court of Canada held a two-day hearing on the constitutionality of a federal Securities Act that was initially proposed back in May 2010. The Act would establish the Canadian Securities Regulatory Authority, which would oversee the regulation and enforcement of uniform federal securities laws in Canada. As anyone who has worked on a Canadian offering well knows, to this day Canada still works under a complex provincial system of securities regulation.

The Court of Appeals of both Alberta and Quebec ruled that the federal Securities Act was outside of the jurisdiction of the Canadian federal government, thus bumping the case up to the Supreme Court. Several provinces made submissions to oppose the legislation, including New Brunswick, Manitoba, British Columbia and Saskatchewan.

Following the hearings on April 13th and 14th, the Supreme Court reserved its decision. You can follow the proceedings on this Stikeman Elliott Canadian Securities Law Blog.

DOL OIG Issues Report on Proxy Voting by Pension Funds

The Office of Inspector General-Office of Audit of the U.S. Department of Labor recently issued its report entitled “Proxy-Voting May Not be Solely for the Economic Benefit of Retirement Plans,” which was prompted by continuing concerns about whether pension plans comply with the Employee Benefits Security Administration (EBSA) requirement that fiduciaries vote solely for the plan’s economic interests and that named fiduciaries periodically monitor proxy voting decisions made by third parties. This report follows a 2004 Government Accountability Office (GAO) study, which raised concerns about legal challenges created by ERISA and DOL statutory authority in ensuring that the requirement of “proxy-voting solely for economic interest” is carried out. Without adequate monitoring or enforcement of the proxy-voting requirements, the concern is that fiduciaries are using plan assets to support or pursue proxy proposals for personal, social, legislative, regulatory or public policy agendas which have no clear connection to increasing the value of investments for the benefit of plan participants.

The DOL OIG noted that the EBSA doesn’t have adequate assurances that fiduciaries or third parties voted proxies solely for the economic benefit of plans, and that the EBSA has dedicated few resources to the enforcement of the requirement. The report recommends that: (1) ERISA be amended to give the Secretary of Labor the authority to assess monetary penalties against fiduciaries that don’t comply with the proxy voting requirements; (2) the proxy-voting requirements be amended to require documented support for fiduciary monitoring of the economic benefit of voting decisions; and (3) the EBSA include proxy-vote monitoring in enforcement investigations. The Assistant Secretary for the EBSA did not agree to implement any of the OIG recommendations.

Mailed: March-April Issue of The Corporate Counsel

The March-April Issue of The Corporate Counsel includes pieces on:

– Today’s Marketplace for Securities of Pre-Public Companies
– Mary Schapiro’s April 6 Letter to Congress
– The Big Banks’ Loss Contingency Disclosure Approach–Will it Satisfy the SEC (and FASB)? – What if it Doesn’t?
– Capital Raising Methods Currently in Vogue–Chart
– Exhibit 5 Opinions in Shelfs–Staff Project
– Foreign Private Offering by U.S. Issuers?
– Backdating Stock Option Exercises–Mercury CFO’s Conviction
– Charter or Bylaw Forum Selection for Derivative Action
– A Few IFRS Convergence Thoughts from OCA Head
– Disclosure of Political Contributions

Act Now: Get this issue rushed to you by trying a No-Risk Trial today.

– Dave Lynn