FT: SEC looking to stop businesses quashing shareholder activism

24 September 2002

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“US regulators yesterday opened up a new front in their battle to reform corporate governance, paving the way for an increase in shareholder activism”, Financial Times reports. “Harvey Pitt, chairman of the Securities and Exchange Commission, said the regulator would be looking to curb businesses from quashing shareholder proposals before they are put to a vote. Shareholder proposals very rarely have any impact if opposed by a company's board”, Mr Pitt said at a conference organised by the Council of Institutional Investors in New York.

'The SEC's chairman singled out a Disney action last year on shareholder activism to illustrate his frustration. 'When Disney was presented with a proposal to let shareholders express their views regarding whether their company's outside auditors should be allowed to do any consulting work, I strongly endorsed the right of shareholders to express their views on such a topical issue.'

'The commission has already taken steps to force mutual funds and other investment companies to disclose how they vote in corporate proxy contests.

'Mr Pitt has faced strong criticism that his past life as a corporate lawyer who worked for groups now the target of SEC investigations has compromised his work at the commission.

FT article

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