• SEC Seeks Public Comment on Proxy System
  • September 13, 2010 | Authors: Ron S. Berenblat; Kenneth A. Schlesinger; Kenneth M. Silverman; Steve Wolosky
  • Law Firm: Olshan Grundman Frome Rosenzweig & Wolosky LLP - New York Office
  • On July 14, 2010, the U.S. Securities and Exchange Commission (the “SEC”) published a “concept release” intended to solicit comment on various aspects of the U.S. proxy system. Broad in scope, the release reviews and seeks public comment on issues relating to the system’s accuracy, reliability, transparency, accountability and integrity. These issues are being reviewed at a time when the dissemination of proxy materials and the casting and tabulation of votes is extremely complex, in large part as a result of a vast majority of shareholders owning securities through broker-dealers, banks and other intermediaries (or “in street name”). The SEC is concerned that the role of third parties such as broker-dealers, banks, custodians and transfer agents and other service providers such as proxy solicitors, proxy advisory firms and vote tabulators in today’s modern proxy voting infrastructure “adds complexity to the proxy system and makes it less transparent to shareholders and to issuers.” While the concept release does not propose the enactment of any new laws, it is likely the SEC will target the issues addressed in the release with future regulation.