In a speech made to the Council of Institutional Investors, U.S. Securities and Exchange Commission (SEC) Commissioner Kara Stein said that the U.S. needs to improve issuer disclosure laws and shareholder voting rights, and explore the fairness of capital markets.
Stein noted that while many have argued for reducing the amount of information required in disclosures, and there may be a need to remove redundancies and outdated requirements, the SEC should focus mainly on “better disclosure.” For example, Stein shared her idea to require issuers to disclose more on their funding arrangements, in order to help prevent companies from relying too much on short-term funding. She also suggested that funds should disclose their securities lending activities, including the percentage of its assets out on loan and how it splits securities lending revenue with its sponsor.
In terms of releasing the disclosures, Stein said that they should be timelier and be presented in a format more easily accessible for analytics.
As for shareholder voting rights, Stein said that the SEC should consider permitting or even mandating universal proxy ballots. Plus, she said, the SEC should reexamine its practice for evaluating issuer no-action requests to exclude shareholder proposals.
Lastly, Stein talked about possible issues with market fairness, including concerns around high-frequency trading. The SEC and investors, she said, need to work together to ensure transparency and determine if the current structure of lit and dark markets is working. Stein also suggested looking into order routing practices to ensure investors have the information they need to understand how this process works.
U.S. Should Improve Issuer Disclosures, Says SEC Commissioner
In a speech made to the Council of Institutional Investors, U.S. Securities and Exchange Commission (SEC) Commissioner Kara Stein said that the U.S. needs to improve issuer disclosure laws and shareholder voting rights, and explore the fairness of capital markets.