Since the beginning of NIRI’s advocacy efforts in 2015, the Capital Area Chapter has played a key supporting role. This includes participating in the annual Leadership Week activities, trekking down to Capitol Hill to visit the offices of senators and representatives, and meeting with the SEC staff.
Leadership Week 2019
In late September, 50 NIRI members and staff spent two days in DC visiting members of Congress and meeting with the SEC staff. This year’s effort was the largest to date—23 meetings on Capitol Hill and a two-hour meeting with the SEC staff.
These meetings covered the issues that NIRI has been advocating—13F (Long) position reporting, and 13D modernization/reform, and more transparent short-position disclosure. You can review the details of each on the NIRI.org website (https://www.niri.org/advocacy/niri-regulatory-positions).
Recent Progress on Proxy Advisor Reform
NIRI’s advocacy efforts have not gone unrewarded. For years, we have advocated for stronger regulation of proxy advisor firms such as ISS and Glass Lewis. As a result of an SEC roundtable held in November of last year, the SEC has taken two key steps in the oversight of proxy advisors:
- Issued interpretive guidance in August of this year outlining steps the buy-side must take with regard to using a proxy advisor (i.e., be the enforcer) and that the advice (i.e., recommendations) from proxy advisors is really a solicitation, thus subject to the SEC’s proxy solicitation rules and anti-fraud provisions, which prohibits false or misleading disclosures, including material omissions in proxy materials.
- In November, proposed new restrictions on proxy advisors in that includes a draft review process for ALL issuers.
You can review the details of these steps on the NIRI.org website through these links:
- Greater Oversight of Proxy Advisors: https://www.niri.org/advocacy/niri-regulatory-positions/proxy-system-reform
- SEC Proposes Rules on Proxy Advisors, Shareholder Resolutions: https://www.niri.org/NIRI/media/NIRI/Executive-Alert/NIRI-EA_Proxy_Reforms_Nov-2019-final.pdf
It’s Time to Get Involved
Any successful advocacy effort is only as strong as the “grass roots” effort that supports it. This is where you, as a NIRI member, can help make the advocacy effort meaningful. Too often, it is the buy-side, and those organizations that represent the buy-side, that are most vocal through their lobbying effort and through the numerous comment letters they submit to the SEC. The issuer community, i.e., public companies, up to this point in time, has not effectively countered the buy-side effort with its own visits to Capitol Hill or to submit comment letters to the SEC. That has to change—especially now that we have an SEC that is currently listening to the issuers’ concerns and encouraging not only comment letters but also visits from issuers.
There are three key steps that you, as a NIRI member, can take to help:
- Educate your senior management, not just the General Counsel or Corporate Secretary, on NIRI’s advocacy issues and how they impact your company. Get buy-in from your senior management.
- Send comment letters to the SEC and letters to your senators and representatives on these issues:
- 13F (Long) position reporting
- 13D modernization/reform
- Better short-position disclosure
- Support of the proposed rules regarding proxy advisors and shareholder proposals
- Visit your senators and representatives and educate them on the importance of modernizing laws and how that will result in better transparency and shareholder engagement. Visit the SEC and tell them how modernizing the rules will do the same; they are seeking your input as they consider these issues.
If we all “pitch in” and help NIRI’s advocacy efforts, we can—and will—make a difference. Thank you in advance for your support of these important advocacy initiatives!