The SEC is making headlines yet again. Last week they were in the news for the careless manner in which they handled the Madoff investigations, and they are back again this week getting sued by the 2 largest business lobbying firms in the country.
us chamber of commerceThe U.S. Chamber of Commerce and the Business Roundtable are suing the SEC for their new shareholder policies. The new policy (“proxy access rule”) was instated this past August and grants more power to the shareholders in nominating candidates to company’s corporate boards. Under the new rule investors who hold at least 3% for 3 years will be able to nominate candidates on company ballots.
This is something that labor unions and pension funds have been fighting for over the past few years. They believe that their stake in a company should be considered just as important as anyone else’s due to the fact that their livelihood depends on the company, and the SEC agrees. Mary Shapiro said the rule is designed to help benefit investors that have a long-term stake in public companies (e.g. people working for the companies) and that the rule is “a matter of fairness and accountability.”
However, the Chamber and Business Round table strongly disagree. David Hirschmann, CEO of the U.S. Chamber’s Center for Capital Markets said that “the SEC’s proxy access rule empowers unions and other special interests at the expense of the vast majority of retail shareholders.” The lobby organizations are afraid that they will lose decision making power within these public companies so they are doing what they can to stop it, and that is suing the SEC.
After reading both sides of the argument I’m not really sure who is right. Should the SEC have the right to grant more power to the labor unions etc., and is it really fair of the lobby organizations to sue the SEC simply because they do not like what they are doing? Is this really a battle over right and wrong, or is it over who wants control? What do you think?