Congress should not stipulate any ownership threshold for a shareholder or group of shareholders to nominate directors through the corporate proxy process, according to a letter from Kurt N. Schacht, managing director of the CFA Institute’s division of standards and financial market integrity.
In a letter Thursday to congressional leaders, Mr. Schacht said institute members are concerned that congressional conferees considering amendments to financial reform legislation might agree to permit proxy access only to investors that have at least 5% of the shares outstanding.
“Such a provision would render this important shareowner right useless,” Mr. Schacht wrote in the letter.
He said the SEC, not Congress, “is in a better position to determine what ownership threshold is appropriate. Moreover, it is easier for the SEC to change its threshold if it finds that the percentage is too high or too low than it is to change a law stipulating such a threshold.”
Mr. Schacht sent the letter to Christopher J. Dodd, D-Conn., chairman of the Senate Banking, Housing, and Urban Affairs Committee; Richard Shelby, R-Ala., ranking Senate Banking committee member; Barney Frank, D-Mass, chairman of the House Financial Services Committee, and Spencer Bachus, R-Ala., ranking member of the House Financial Services Committee.
Both bills reaffirm the SEC authority to issue a proxy access rule. The SEC on June 11, 2009, proposed a proxy access rule but hasn’t voted on it.
Congressional conferees are trying to reconcile the Restoring American Financial Stability Act of 2010, which passed the Senate on May 20, and the Wall Street Reform and Consumer Protection Act, which passed the House last December.