SEC Favors Special Interests in New Corporate Elections Rule
Posted by Mark A. Calabria
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Yesterday, the SEC repealed a long-standing rule which allowed brokers to vote shares on behalf of their investors, unless they obtained written directions from each individual investors. While investors have long been able to direct the voting of their shares, many do not take the time to. In these cases, the brokers vote those shares, after all they are the agents of the investors and are hired to act on their behalf.
The direct effect of the rule will be to reduce the voting weight of retail investors, as represented by their brokers. In voting against the rule, SEC Commissioner Kathy Casey raised the point that the rule would skew voting toward large institutional investors and away from little retail investors.
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Then one should not be too surprised to see pension funds be allowed to cast their “uninstructed” votes while brokers cannot. The largest pension funds manage the retirement of unionized state and local employees, often with the fund management itself representing the interests of the unions. We witnessed this same favoring of union interests over the common good in the auto bailouts.
The rule once again illustrates that the new bosses in Washington are busy rewarding their allies at the expense of everyone else.
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I’m shocked — “I’m shocked, shocked to find that gambling is going on in here!” Captain Renault in Casablanca — that there is politics going on in regulation. Ever heard of “regulatory capture” or as a normal human being would call it: “The inmates are running the asylum”!
The SEC did so well in the Made-Off scandal. Never did reimpose the uptick rule. Never did figure out the “ratings agency” problem.
But they can sure pay off contributors fast!
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