WASHINGTON, D.C.— Benjamin Schiffrin, Director of Securities Policy for Better Markets, issued the following statement in connection with the Securities and Exchange Commission (SEC) proposing to rescind the rule that allows shareholders to submit proposals and demand a vote on issues that concern the companies that they own:
“SEC Chair Paul Atkins is out of control. He has already proposed rescinding rules that prevent ‘pay-to-play’ practices by investment advisers, that ensure investors receive the best prices on their trades, and that provide investors with material information about the climate risks companies face. Now, he is proposing to eliminate a basic shareholder right—the right to a vote on matters that shareholders consider important to the company.
“As part of its campaign to dismantle investor protections, the SEC already made it easier for companies to exclude shareholder proposals from a vote, so that regardless of whether the proposal is popular or unpopular, it wouldn’t matter because shareholders would never have a chance to express their views. Apparently frustrated that more companies had not acted to availed themselves of these opportunities to silence shareholders, Chair Atkins recently said that ‘if companies remain lackadaisical and refuse to pick up the substantial tools that we have laid on the table to help them do so, then I do not know what more we can do to intervene in their stead.’ His solution seems to be eliminating the longstanding rule that facilitates the ability of investors to submit proposals entirely.
“The SEC now says that it lacked the authority to adopt this rule in the first place. But in 1947, a federal appeals court said that it entertained no doubt that the rule ‘represents a proper exercise of the authority conferred by Congress on the Commission.’ That the SEC now says it ‘disagrees’ with this view is not a basis for rescinding a rule a court upheld.
“No more persuasive are the policy rationales the SEC advances for rescinding the rule. The SEC has long recognized that shareholders generally have a right to bring matters before other shareholders for a vote. This makes sense, since shareholders are the ultimately owners of the company. The fact that the SEC, which is supposed to protect investors, would want to deprive shareholders of this basic right is unconscionable.”
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Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.org.
