Don’t Just Complain About the SEC, Do Something

It’s so easy for PMs to bitch and moan – about how poorly companies disclose results to investors, or about the SEC in general. Between voluminous, dense, and opaque financial filings and arcane, baroque proxy materials, we shareholders have a hard enough time understanding portfolio company results, much less doing something about them as we plan and prosecute activist projects.

We’ve always had an opportunity to advocate for our needs at the SEC, and even lobby in Washington or Delaware for sensible, necessary improvements. Recently, it became a bit easier to express our views, in comments to the SEC and in advocating for the shareholder perspective on important investor issues.

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Send comments to the SEC!

As corp gov junkies well know, the SEC solicits comments from anyone about proposed regulations. Typically, corporate interests like the Business Roundtable or US Chamber of Commerce respond promptly and thoroughly. Corp gov advocates like the Council of Institutional Investors (CII) do so, too. Professional investors, not so much.

The SEC employs a straightforward comment process. They typically require comments about a given regulatory proposal in a strict format. You usually need to answer a number of specific questions about a regulation, and only those questions.

A couple of weeks ago, the SEC announced it wants general thoughts about Regulation S-K, the central regulations that govern public company financial disclosures. The SEC invites general comments on how companies disclose information about a number of important areas:

  1. director and officer backgrounds
  2. exec comp plans
  3. shareholder ownership
  4. insider relationships and share purchases and sales
  5. BoD structure and processes.

The SEC makes it easy to comment, too, using an online form. They will take comments until around October 25, 2016.

Support CIRCA!

This is also a good time to highlight the Council for Investor Rights and Corporate Accountability (CIRCA). Five activist investors (Elliott Management, Icahn Enterprises, JANA, Pershing Square, and Third Point) formed it earlier this year, to advocate for the professional investor perspective on legal and regulatory matters.

CIRCA developed over a year or so, in discussions with the five backers and others. They retained S-3 Group to organize it, and filed as a lobbyist in Washington in June. They announced the formation of CIRCA around the time the Brokaw Act was introduced in Congress.

As a lobbying group, CIRCA hasn’t sought much publicity lately, or tried to recruit additional members. They no doubt would welcome that, though, so interested investors might learn more about it, and participate.

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Merely providing intelligent comments to the SEC or lobbying with CIRCA won’t change much in Washington. We do know that nothing will change without at least that.