The SEC, Regime Change and Congress

It is a pleasure to watch some of the changes taking place at the Securities and Exchange Commission.  With regime change at the top, a corporate governance agenda is quickly taking place.  We expect to see an access proposal shortly (for a history of access, from the 1940s through the present, take a look at The SEC, Corporate Governance, and Shareholder Access to the Board Room).  Rule 452 of the NYSE is about to be amended, preventing broker-dealers from voting uninstructed street name shares for unopposed directors (thereby making it easier for the directors to succeed under a majority vote standard).  Other proposals will be coming. 

With the SEC stepping up to the plate, where is Congress?  Congress has at time expressed grave concern over executive compensation but has done little except to restrict bonuses in financial institutions taking TARP funds. There has been no serious attempt yet to permanently change the way executive compensation is determined. 

One small exception is S 386.  The Act in part extended federal laws to mortgage companies.  In addition, however, it provided funding to beef up enforcement, with funds slated to go to the FBI (to beef up the white collar unit) and the US Attorneys' Office (among other prosecutors).  In the original draft, the bill made no mention of the Securities and Exchange Commission.  Senators Schumer and Shelby are trying to get the bill amended to add in $20 million of additional funding for the Securities and Exchange Commission.

The Agency can use the resources.  In addition, it would be a tremendous moral booster to have the SEC be on the receiving end of good news rather than the butt of relentless criticism.  Hopefully the Schumer/Shelby amendment will make it into the final bill.