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Report: SEC to propose rules to increase oversight of proxy advisory firms


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Report: SEC to propose rules to increase oversight of proxy advisory firms

The top U.S. securities regulator is reportedly nearing a vote to propose rules that could, if passed, significantly alter certain elements of the corporate governance processes.

According to the Financial Times, the SEC's five-person commission is expected to vote Nov. 5 to propose a series of long-awaited recommendations related to proxy advisory firms and shareholder proposals. The rule proposals would mark the regulator's latest effort to bolster its oversight of the U.S. corporate governance systems that have dominated the way companies operate for decades.

The regulator is specifically considering a proposal that would require proxy advisory firms such as Glass Lewis & Co. LLC and Institutional Shareholder Services Inc. to give companies two opportunities to review their reports before they are sent out to shareholders, the Financial Times said, citing people familiar with the plans.

The SEC is also weighing a proposal that would raise the threshold of support a shareholder must reach in order for his or her proposal to be considered. Those thresholds are currently set at 3%, 6% and 10% in the first, second and third respective years the proposal is submitted, according to the report. The SEC is considering raising those thresholds to 6%, 15% and 30%.

If the SEC approves the proposals in November, it would kick start a lengthy regulatory process that could last for months, as the commissioners will gather input from the public on the proposals and conduct another review before finalizing the staff's proposals.