The third top story of the year involved the SEC, which rarely stirs up as much of a furor as it did in 2019.
The year began with controversy over the SEC's December 2018 approval of the implementation of a two-year transaction fee pilot program to measure the effects of maker-taker rebates on equity trade execution.
In February, the New York Stock Exchange, Nasdaq and Cboe all filed petitions with federal courts to stop the program. The NYSE, for one, asked to have the program ruled unlawful, saying that it is "arbitrary and capricious," does not promote competition and exceeds the agency's authority.
Nasdaq said in a statement at the time that it believed the SEC's pilot "will harm capital formation, severely damage market participation with wider spreads, and increase the cost of capital for corporate issuers."
Under pressure from court challenges, the SEC put the program on hold in March.
In June, SEC commissioners approved a standards-of-conduct package, commonly known as Reg BI, which features a best-interest standard that compels brokers to put clients' financial interests ahead of their own and requires them to mitigate financial conflicts. Consumer advocacy groups including AARP said the regulation was too ambiguous and doesn't mitigate conflicts of interest. Other critics said the action was too vague and was not legally enforceable.
The U.S. House of Representatives passed an amendment attached to a larger spending bill later in June to prohibit enforcement of the rule, and eight attorneys general filed a federal lawsuit in September challenging the rule.
Finally, in August, the SEC approved guidance stipulating that proxy advisory firms must disclose how they reach their shareholder recommendations. The new rules also include changes to the shareholder proposal process, raising the minimum amount of stock held and the time held — currently $2,000 and one year — before shareholders could file resolutions at annual corporate meetings. The new proposal calls for a minimum of $2,000 and three years, $15,000 and two years or $25,000 for one year. While the business community applauded the move, others were less enthusiastic.
The Council of Institutional Investors urged the agency in October to change course, and proxy advisory firm Institutional Shareholder Services Inc. went a step further later that month, suing the SEC for what it termed as exceeding the agency's authority. Both were in response to the SEC's decision that proxy-voting advice generally constitutes a "solicitation" under the federal proxy rules and said the failure to disclose certain information required under existing law would render the advice materially false or misleading.