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CFA Institute urges SEC to revive its proxy access rule

The CFA Institute on Friday called for the Securities and Exchange Commission to revive its proxy access rule, contending it would increase U.S. market capitalization by as much as $140.3 billion.

“The results of (research) suggest that proxy access has the potential to enhance board performance and raise overall U.S. market capitalization by between $3.5 billion and $140.3 billion, said a CFA Institute report, released Friday.

Those estimates reflect between 0.023% and 1.134% of the S&P 1500 market capitalization, the CFA Institute said in a report, “Proxy Access in the United States: Revisiting the Proposed SEC Rule.”

Proxy access “would serve as a useful tool for shareowners in the United States and would ultimately benefit both the markets and corporate boardrooms, with little cost or disruption to companies and the markets as a whole.” the 141-page report said.

The CFA Institute urged the SEC to conduct a meaningful cost-benefit analysis to assess “whether the proxy access rule benefits shareowners and the market.”

“None of the (research indicates) that proxy access reform will hinder board performance,” the report said.

The U.S. Court of Appeals in Washington in July 2011 invalidated the SEC rule that would have required corporations to provide shareholder access to corporate proxy materials to nominate directors. The SEC adopted the rule, which was to be effective Nov. 15, 2010, under a provision in the Dodd-Frank Wall Street Reform and Consumer Protection Act. But the rule was suspended by the SEC on Oct. 4, 2010, after it was challenged in a lawsuit filed by the Business Roundtable and the U.S. Chamber of Commerce.

SEC officials declined to comment about the CFA Institute report, Judith Burns, SEC spokeswoman, said in an e-mail.

The report can be read here.