CalPERS urged the SEC to strengthen investor protection, accountability, disclosure and market regulation by addressing key priorities that would promote long-term value creation, according a listing of the concerns released Tuesday with the meeting agenda for the $263.2 billion pension fund's investment committee.
Presenting the list of priorities in a meeting with Mary Jo White, SEC chairwoman, officials of the California Public Employees' Retirement System, Sacramento, sought to bolster investor rights, including calling for the Securities and Exchange Commission to allow shareholder proposals for rotation of independent auditors of corporations.
“CalPERS supports independent, high-quality audits and sees rotation as an important element,” a four-page statement of priorities states.
Among other priorities, CalPERS called for the SEC to promote better corporate boards, urging “the commission to closely monitor the adequacy” of SEC requirements for disclosure on diversity of board composition, “moving companies to greater transparency around the directors and nominee qualifications,” according to the statement.
In addition, CalPERS urged the SEC to support calls for the New York Stock Exchange and Nasdaq to change their listing rules to require directors who fail to receive a majority of votes in uncontested elections to step down. The SEC would have to approve such changes.
To strengthen corporate disclosure, CalPERS urged the SEC to continue to work with the Sustainability Accounting Standards Board, an independent organization, in developing industry-specific sustainability accounting standards for publicly traded companies “to underscore the importance of material sustainability risk disclosure,” according to the statement.
In addition, CalPERS called for:
- the SEC to complete its work with the International Accounting Standards Board to bring U.S. and international accounting standards into alignment;
- “smart regulation” on credit-rating agencies, including developing “an independent mechanism to track the accuracy and effectiveness of the ratings process and complete the study of financing alternatives for credit-rating agencies”; and
- the SEC to “finalize the rulemaking” for restrictions on proprietary trading, known as the Volcker rule, which CalPERS believes “will mitigate the risks systemically important financial institutions pose to the overall financial system,” according to the statement.
CalPERS also criticized the Jumpstart Our Business Startups Act, enacted last year. It contends the act “reduced long-standing investor protections and relaxed critical financial disclosures” and “is more likely to discourage the allocation of capital by institutional investors,” according to the statement.
Joe DeAnda, CalPERS spokesman, and Judith Burns, SEC spokeswoman, didn't respond to requests for comment.