by Cydney Posner
With Congress and the Presidency soon to be under Republican control, it would not be surprising, unless the SEC acted with unusual speed, if the universal proxy rules never went into effect. Commissioner Piwowar, a Republican appointee, dissented from the vote to approve the proposal, arguing that universal proxies would facilitate proxy fights and empower special interests to the detriment of smaller retail shareholders. In his remarks at the open meeting where the proposal was considered and approved by a two-to-one vote (see this PubCo post), he also observed approvingly that Representative Scott Garrett (now defeated in his bid for reelection) had raised questions about how the SEC had been prioritizing its resources in pursuing universal proxy rules, an initiative that he said had been pushed for years by special interest groups. Piwowar’s views could signal the views that a new Republican-leaning SEC may share. As noted in thecorporatecounsel.net blog, the WSJ has reported that current SEC Chair Mary Jo White is expected to step down by the end of President Obama’s term and that Piwowar is likely to be appointed as interim chair until the Senate confirms the selection of her successor. (The WSJ also reported that former SEC Commissioner Paul Atkins is heading up the transition effort concerning the SEC and other financial regulators.)
Moreover, universal proxy has been one of the concepts disfavored by the House Republicans. A recent appropriations bill, H.R. 5485, passed by the House in July 2016 on a largely party-line vote, provided that none of the funds could be used by the SEC “to propose, issue, implement, administer, or enforce any requirement that a solicitation of a proxy, consent, or authorization to vote a security of an issuer in an election of members of the board of directors of the issuer be made using a single ballot or card that lists both individuals nominated by (or on behalf of) the issuer and individuals nominated by (or on behalf of) other proponents and permits the person granting the proxy, consent, or authorization to select from among individuals in both groups.” Congress is expected to consider a government funding bill in December. (See this PubCo post.)
