March 11, 2004

More “SEC Speaks” Notes We

We have posted our own notes from PLI’s “SEC Speaks” from the Corp Fin panels.

The SEC’s Roundtable on Shareholder Access

Yesterday’s roundtable at the SEC was filled with star-studded panelists and was quite a program. The SEC did a great job of bringing in the best and brightest from all corners of the debate and it really brought those 13,000 comment letters to life. (About 150 attended live – I was surprised there were empty seats.)

To me, the most persuasive arguments were presented by Ira Millstein and Joe Grundfest on why the SEC should hold off on its proposed framework – and instead use a simpler model based on holding “true” elections of directors. They argue that the current plurality system is fundamentally flawed and that the SEC’s proposal doesn’t fix that problem (David Ruder called the proposal a Rube Goldberg solution and Carter Beese said it was prone to the law of unintended consequences).

Based on the way that Commissioner Harvey Goldschmid debated some of the corporate advocates, I doubt he is going to change his mind. Commissioner Campos read a statement early on and otherwise was silent. Chairman Donaldson asked a few questions but did not reveal if his leanings were changing at all. So I would hazard to guess that the Commission will bless its proposal sometime in a month or so, perhaps with some changes at the edges (although you never know and I could be wrong).

If the SEC does adopt its proposal, the head of the US Chamber of Commerce threatened to sue. A panel packed with academics provided a variety of arguments supporting the SEC’s authority to adopt its proposal. So the ultimate showdown might be a few years away in a court somewhere.

The Evelyn Y. Davis Show

In mid-afternoon, Evelyn Davis’ panel took the stage and Evelyn kicked it off with a 15-minute monologue. If I was Mark Burnett – the “vision” behind all those reality TV shows – I would grab Evelyn for her own show as soon as possible.

Evelyn was quick to mention how she had spoken to the CEO of Bank of America last week and advised him not to pay the SEC’s fine in the mutual fund scandal (and reported that the CEO was thinking about it!). She claimed that she had also spoken to SEC Enforcement Director Cutler a few days ago regarding the same. Not sure how this is relevant to the shareholder access proposal, but it made for a solid entertainment break from the weighty issues of the day. She is one of a kind. (By the way, Evelyn opposes the SEC’s proposal – because it discriminates against retail investors.)