Proxy Access: Why Did the SEC Publish a Release to Lift the 14a-(8) Stay? Yesterday, the SEC's release on lifting the Rule 14a-8 stay on proxy access shareholder proposals was published in the Federal Register – so it's now "live." I was in the midst of cross-country travel last week when I blogged about the SEC's rulemaking that related to the lifting of the stay. Given that it was a 4:45 am blog before I jumped on a plane, I wondered – but didn't have time – to research the technical question of why the SEC issued a release titled "Final rule; notice of effective date" that seemed to time the lifting of the stay with publication of that release in the Federal Register. Since the SEC did post a separate order granting the stay – and its language didn't seem to require any further release or publication – I was left with curiosity. Administrative law is not my bailiwick so I admit that I still don't know the answer. I have perused some of the numerous law firm memos that have been drafted in the wake of the order, but the only thing that I have found somewhat related was an excerpt from this Sullivan & Cromwell memo: The SEC's effectiveness order relates not only to Rule 14a-8, but also to the other related rules adopted as part of the proxy access rule changes (other than Rule 14a-11). Many of these related rules seem to have no practical impact because they relate only to the now-vacated Rule 14a-11 – these include the exemptions from the proxy rules for solicitations by nominating shareholders to form a nominating group or in support of a candidate, as well as the safe harbor for Schedule 13G eligibility. As they now stand, these provisions do not apply to nominations made through a company's proxy access bylaws. Some of the new rules, however, will have an impact on nominations made through a company's proxy access bylaws. These include Rule 14a-18, which requires the nominating shareholder to file a Schedule 14N containing specified information and representations, and Rule 14a-6, which confirms that inclusion of a proxy access nominee will not require filing of a preliminary proxy. By the way, here are the results from my poll regarding how many proxy access proposals folks think there will be in '12: 30% – less than 10 proposals; 30% – 11-20; 20% – 21-30; 7% – 31-100; 7% – over 100. The Witch Hunt Continues: The SEC's IG Report on Madoff Six months ago, I blogged about the ridiculous witch hunt regarding former SEC General Counsel David Becker. In what may be one of the low points for the SEC in its history, the SEC's Inspector General David Kotz released his 123-page report on the matter – which states that he has made a referral to the Department of Justice under a criminal conflict of interest provision. I received emails all day long from former Staffers bemoaning the state of affairs at the agency. Beginning on page 100, the report notes that David Becker did, in advance, seek an answer from the SEC Ethics Counsel as to whether he should work on Madoff matters. He fully disclosed the fact that he had been a beneficiary of his mother's estate which had invested in Madoff funds. The Ethics Counsel told him he did not need to recuse himself. And as noted on pages 10 and 11 of the report, SEC Chair Shapiro knew of the investment too – the Chair issued this statement yesterday. Here is an excerpt from this NY Times article: Mr. Becker's lawyer, William R. Baker III, said in a statement that the report confirmed that Mr. Becker had notified seven senior SEC officials about his late mother's Madoff account, including Ms. Schapiro and the agency's designated ethics officer. "The inspector general concluded that 'none of these individuals recognized a conflict or took any action to suggest that Becker consider recusing himself from the Madoff liquidation,' " wrote Mr. Baker, a lawyer at Latham & Watkins who worked at the SEC for 15 years, working alongside Mr. Becker at times. He said the report contained "a number of critical factual and legal errors," but declined to enumerate them. Mr. Becker left the SEC last February. There will be a joint House Financial Services Committee and Committee on Oversight and Government Reform hearing tomorrow regarding the report, where IG Kotz can once again demonstrate that he somehow is the most important person at the agency, assisted by some on the Hill. Simply amazing. And depressing as David did what he was supposed to do and they're continuing to put him through the ringer… More Congress Nonsense on SEC Modernization, Accountability Mommy, please make it stop! Last week, the House Financial Services Committee dragged down senior officials once again – this time for a hearing entitled "Fixing the Watchdog: Legislative Proposals to Improve and Enhance the SEC" – to discuss two bills: the "SEC Regulatory Accountability Act" and "SEC Modernization Act of 2011." I've already blogged bashing the latter and the former would require the SEC to engage in additional cost-benefit analysis before promulgating any new regulation. Here's SEC Chair Schapiro's testimony – and it's worth reading this Washington Post article about former SEC Chair Harvey Pitt's blasting of both proposals (he also had sharp words – indirectly – for SEC Inspector General Kotz). Meanwhile, season senior SEC Staffers continue to make their way to the exits. 25-year vet Jamie Brigagliano, Deputy Director of SEC Division of Trading and Markets, is the latest to make a departure announcement. John Walsh also recently left after 25 years of service in OCIE… – Broc Romanek
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