More on "Should More Companies Be Going Public?" A few weeks ago, I blogged both about the SEC's efforts to study a push to get more companies public – a push fueled by Congressional interest – as well as the Groupon gunjumping saga. Both of these blogs are related in a sense because some would view Groupon as a good example of a company not ready to go public. On Friday, the company filed it's Pre-Effective Amendment #3 to its Form S-1. This amendment includes an Appendix A consisting of the information that the CEO sent to employees at the end of August – not the first instance of potential gunjumping for the company. More importantly, the amendment changes the way that the company counts revenue – calling into question whether the company's accountants can be trusted, as noted in this WSJ article and this blog. Simply opening the floodgates to allow more companies to prematurely lure investors into parting with their money – before these companies develop the proper type of compliance culture – will not magically cure what is wrong with our economy and job situation. If anything, it will make it worse as the credibility of our markets will take yet another hit… Last week, Corp Fin Director Meredith Cross and Deputy Director Lona Nallengara delivered this testimony before the House Subcommittee on Capital Markets in a hearing about small business capital formation and job creation. Meanwhile, Meredith has recused herself from any further deliberations about crowdfunding because of some work she did for Lending Club before she came to the SEC, even though she had been cleared by the SEC's ethics counsel. Growing Activism on Corporate Political Spending Disclosure For over a decade – well before the controversial Citizens United decision from the Supreme Court last year – there has been activism to elicit more disclosure from companies about their political contributions. The Center for Political Accountability has been successful in pressuring quite a few large companies into posting their political spending policies online. And there have been numerous rulemaking petitions submitted to the SEC, the latest coming last month from Professor Bebchuk and 9 others. Activism through the shareholder proposal process on this topic has been growing, as reflected on pages 11-12 in this ISS post-season report. And now we have this letter that recently was sent to all S&P 500 companies from the Sustainable Investments Institute (Si2) asking them to review their profile and provide feedback. Si2 is planning to release a report on November 10th based not only on the responses it receives, but on much drilled down data it has been collecting. The report, sponsored by the IRRC Institute, should be more comprehensive than research on this topic to date since it will focus on more than just the top tier companies – and it will enable us to see how things have moved from last year to this, now that companies have had a chance to react to Citizens United in their policies. Ceres' New "Proxy Voting for Sustainability" Guide Last week, Ceres released a "Proxy Voting for Sustainability" guide which is designed to assist investors respond to environmental, social and governance – aka "ESG" – issues. The guide lays out 4 sets of principles and provides sample proxy voting guideline language. It also includes more than 75 specific best practice examples of proxy guidelines. There have been 720 ESG shareholder proposals over the past 2 years – and I expect there will be more going forward… – Broc Romanek
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