SEC Chairman Schapiro

SEC Statement on Proxy Access Litigation

On September 6, SEC Chairman Schapiro confirmed that the SEC is not seeking a rehearing or Supreme Court review of the decision by the U.S. Court of Appeals in Washington, D.C. vacating Rule 14a-11 which would have required companies to include shareholders’ director nominees in company proxy materials. The SEC had also previously adopted Rule 14a-8 which permitted eligible shareholders to require companies to include shareholder proposals for proxy access procedures in company proxy materials. The SEC stayed the effective date of Rule 14a-8 until the court’s decision on Rule 14a-11 is finalized, which is expected to be September 13. SEC Release.

Letter from the SEC to Rep. Darrell Issa on Capital Formation and Section 12(g) of the Securities Exchange Act

On April 6, SEC Chairman Schapiro issued a public letter to Rep. Darrell Issa, Chairman of the Committee on Oversight and Governmental Reform, in response to his letter on March 22 concerning the SEC and capital formation. Among the items discussed in the letter, Chairman Schapiro addressed Section 12(g) of the Exchange Act and the limit of 500 holders of record before a company must register its securities with the SEC. In light of the burdensome nature of registering the securities of smaller companies as well as the ability of much larger companies to aggregate multiple shareholders under a single holder of record, thereby avoiding registration, Chairman Schapiro stated, “I believe that both the question of how holders are counted and how many holders should trigger registration need to be examined.” SEC Letter.

SEC Chairman on Equity Market Structure

On September 7, SEC Chairman Schapiro discussed issues facing the equity market structure, including: (i) circuit breaker mechanisms that directly limit price volatility, (ii) the regulatory scheme for high frequency trading firms, (iii) the practice of submitting large volumes of orders into the markets, most of which are cancelled, and (iv) the effect of market fragmentation on public price discovery and market stability. SEC Release.