June 17, 2010

A Lot of House-Senate Reconciliation Action on Governance Provisions: A Partial Skinny

Ted Allen of ISS does a great job of recapping the results of yesterday’s marathon negotiations over the regulatory reform bill’s governance provisions in this blog that he wrote at 12:30 am. Bravo to him on his stamina! The negotiations will continue today in this area and are still being televised on C-SPAN.

Here is a recap based on what Ted wrote and what others have written to me (note that it’s hard to know for certain what is going on and it could all change):

– Mandatory majority voting has been dropped from the bill as Senate conferees have agreed to eliminate it; this was not in House bill

– Proxy access provision could become more detailed as Senate conferees agreed to impose a 5% ownership standard and a two-year holding period on shareholders who wish to nominate directors (under Base Text, details would have been left up to the SEC); uncertain if House conferees will accept this change

– Say-on-pay could be altered to allow companies to hold them on a biannual or triennial basis rather than be forced to do so annually; not certain whether this will be accepted by either Senate or House conferees

– Senate conferees accepted a House provision to permanently exempt small issuers from SOX’s auditor attestation requirements – even though the Dodd bill didn’t have this provision in it

– Senate conferees didn’t accept House conferees’ proposal to mandate votes on “golden parachute” packages

– Senate conferees accepted House conferees’ proposal to require large institutional investment managers to disclose their say-on-pay votes

– Senate conferees accepted House conferees’ proposal to ensure that the SEC’s independence standards for compensation consultants are competitively neutral

– House conferees voted to add a new provision to permit private rights of action for aiding and abetting (overturning Stoneridge and Central Bank) even though there was no similar provision in Base Text (but this provision did exist in an older version of a House bill from last December); not likely that Senate conferees will accept this

– House conferees accepted SEC self-funding, as well as creation of new SEC offices for whistleblowers and ombudsman; Senate had already approved this in Dodd bill – but now some Senators are trying to strip the SEC’s self-funding. Proving my note at the beginning about how this all could change…

It’s interesting how some blogs have sprung to assist folks in contacting members of Congress to pressure them on these negotiations even as they happen – see this blog as an example. And it’s also interesting to note that even regulators are willing to express their view on the future of the reform bill, check out this “thumbs up and down” chart from NASAA…

SEC’s ‘Revolving Door’ Under Review

Yesterday, the WSJ ran this article – entitled “SEC ‘Revolving Door’ Under Review” – that describes how Senator Grassley sent a letter to the SEC’s Inspector General on Monday seeking a review of the recent departure of a top Market Reg Staffer who took a job with a prominent high-frequency trading firm. This comes on the heels of a similar WSJ article in April (see my somewhat related blog).

Meanwhile, the “Project on Government Oversight” Blog has the latest on the SEC’s Inspector General’s findings of whistleblower retaliation in the SEC’s Fort Worth office.

How NOT to Engage in Illegal Insider Trading

Thanks to Usha Rodrigues over on the Conglomerate Blog for the comical blog entry that I repeat below:

OK, I’m throwing in the towel-the Disney insider trading is just too good. Here’s the letter sent to various hedge fund managers:

Hi, I have access to Disney’s (DIS) quarterly earnings report before its release on 05/03/10 [sic]. I am willing to share this information for a fee that we can determine later. I am sorry but I can’t disclose my identity for confidentiality reasons but we can correspond by email if you would like to discuss it. My email is I count on your discretion as you can count on mine. Thank you and I look forward to talking to you.

– Broc Romanek