Recently, I blogged about how two companies have gone to court in an attempt to exclude shareholder proposals submitted by John Chevedden based on eligibility grounds (ie. KBR, whose recently-filed court challenge is pending – and Apache, whose court challenge occurred last year). These cases hinge on whether a letter from an entity that is not a registered broker dealer or a DTC participant is proper evidence of ownership under Rule 14a-8.
These cases also raise questions about whether an introducing broker is a “record holder” for the purposes of Rule 14a-8. Interestingly, even though last year the entity at issue – RAM Trust – claimed to be an introducing broker – this year it now characterizes itself as a bank according to its most recent submission. Based on past SEC Staff practice, we would expect the Staff to refrain from responding to KBR’s notice of its intent to exclude the Chevedden proposal, which would be consistent with its practice of not commenting on matters that are the subject of litigation. It is less clear whether the Staff will respond to Apache’s latest notice, which was not filed concurrently with a lawsuit this time around. Stay tuned…
It also appears that at least a half dozen other companies – including Allstate, International Paper, McGraw Hill, Bristol Myers – have taken the traditional route of seeking no-action relief from the Corp Fin Staff to exclude proposals submitted by Ken Steiner, who in turn has listed Chevedden as his proxy.
The incoming no-action requests from these companies note that Steiner’s ownership verifications appear to be pre-signed by the introducing broker – Mark Filiberto, DJF Brokerage’s president – and they allege that Chevedden then filled in the company name, shares owned and date of ownership on the blank form that had been pre-signed with an October 12, 2010 date. Some of the later incoming no-action requests even include a handwriting expert certification that it is Chevedden’s handwriting on Filiberto’s signed letters (and that the pre-signed letters are all identical copies).
If true, this seems to be a case of double secret alter egos. It will be interesting to see how the Corp Fin Staff responds to these letters as it seems one thing to allege that someone is acting as an alter ego, but an entirely different thing to allege they have forged a letter. Who knew that disclosure lawyers would have a need for handwriting experts!
Our February Eminders is Posted!
More on our “Proxy Season Blog”
With the proxy season in full swing, we are posting new items regularly on our “Proxy Season Blog” for TheCorporateCounsel.net members. Members can sign up to get that blog pushed out to them via email whenever there is a new entry by simply inputting their email address on the left side of that blog. Here are some of the latest entries:
– Proxy Access: Questions to Be Addressed if the Rules Take Effect
– More on “Proxy Plumbing: Analysis of Comment Letters”
– ISS’s Final U.S. Postseason Report
– CalPERS Reconsiders Corporate Engagement, Focus List
– Investors Pressure DOL on Environment, Social and Governance
– Broc Romanek