Investors Urge SEC to Halt Move on Proxy Access

Eight top U.S. and international pension funds yesterday urged the Securities and Exchange Commission to halt a vote on two rule proposals that would allow shareholders’ the opportunity to nominate directors for company boards.

 

The California Public Employees’ Retirement System (CalPERS), the Colorado Public Employee’s Retirement Association, and other funds joined by the Council of Institutional Investors issued the appeal at a news conference yesterday and in letters to SEC Chairman Christopher Cox. Those letters asked the SEC to table the two proposals until two new appointments are made to the SEC board. Roel Campos, a Democrat, left the Commission this fall, leaving the panel Republican-dominant. Annette Nazareth, the only other Democratic commissioner, plans to leave soon.

 

“We are assembling to highlight what we believe is the specter of a serious wrong turn. The SEC’s major customers – pension funds that invest billions and billions of dollars in U.S. capital markets – are dead serious in opposing this action.  We see it in direct conflict with the duties of the SEC to ‘do no harm’ to investors in promulgating regulations.” -- Fred Buenrostro, CalPERS

 

“There is no reason for the Commission to act at this time,” Meredith Miller, assistant treasurer for policy at the Connecticut Retirement Plans and Trust Funds, said in a statement.  “The sky has not fallen and the markets are working.  And while the vast majority of corporate boards are doing a good job, there are some boards that are failing their shareholders.  In those cases, it would be useful and good for shareholder value for shareholders to have an effective tool to at least nominate a few new directors on those boards.  Access to the proxy is that tool.”

 

Cox, citing uncertainty in the market, has proposed a vote on the two proposals, which would allow companies to keep shareowner proposals related to directors’ elections off proxy ballots.

 

“We are assembling to highlight what we believe is the specter of a serious wrong turn,” Fred Buenrostro, CEO of CalPERS, said in a statement.  “The SEC’s major customers – pension funds that invest billions and billions of dollars in U.S. capital markets – are dead serious in opposing this action.  We see it in direct conflict with the duties of the SEC to ‘do no harm’ to investors in promulgating regulations.”

 

What’s more, the American Federation of State, County, and Municipal Employees (AFSCME) has said it will sue the SEC if a less expansive rule is in fact approved at the end of the month, according to Business Week.