Investors voice 'disappointment' at SEC

On Wednesday (28 November) the US Securities and Exchange Commission (SEC) voted to prohibit investors in US companies from submitting proposals on board elections.

SEC's Chairman Chris Cox said the decision was needed to clarify legal uncertainty around the issue, and prevent disruption in the upcoming 2008 proxy season. However, he suggested that the Commission will revisit the issue next spring.

Shareholder advocates in the US, including F&C, were disappointed with the decision, and consider it a further retraction of shareholder rights in the US, which are already more limited than those in other developed countries. F&C is among a number of institutional investors who have been asking Cox not to go ahead with this vote ever since the Commission announced proposals to reform proxy access.

"We are disappointed that the SEC has gone ahead with its proposal to prevent shareholders from summiting proposals on board elections," said Karina Litvack, Head of Corporate Governance & Sustainable (GSI) at F&C. "However we see this as a temporary setback and we are hopeful that, with more time on their hands, the Commission will reconsider its decision in 2008 and open give shareholders in US companies the same rights that we enjoy in other markets."

The decision rolls back a small opening that shareholders had during 2007 thanks to a federal appellate court decision. Following yesterday's vote, several investors responded by immediately filing proxy access proposals at Bearn Stearns and JPMorgan Chase, hoping to bring the issue back into the courts.