Founded in 1969, NIRI is the professional association of corporate officers and investor relations consultants responsible for communication among corporate management, shareholders, securities analysts and other financial community constituents. The largest professional investor relations association in the world, NIRI’s more than 3,500 members represent 2,000 publicly held companies and $5.4 trillion in stock market capitalization.

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SEC Will Be Buzzing

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SEC Will Be Buzzing

The heat wave on the East Coast has kept many of us looking for ways to stay cool. However, in Washington, the “hot air” became even hotter as news of the Shirley Sherrod mistake and Charlie Rangel’s ethics problems seemed to overshadow President Obama’s signing of the landmark Dodd-Frank Wall Street Reform and Consumer Protection Act on Wednesday. Many on Wall Street who are directly affected by the legislation were, in an uncustomary manner, not invited to the signing ceremony. Regardless, things now become really interesting.

The SEC must hire approximately 800 additional staff in order to handle new responsibilities, issue more than 200 new rules and complete almost 20 studies in a relatively short time period. Some of these new regulations will affect IR professionals as we outlined in NIRI’s most recent Executive Alert on the impact of financial reform. I don’t expect the SEC to wait long – I am already hearing that by as early as next month we may see a final proxy access rule for shareholder nominated directors. Because Congress is on recess most of the month until after Labor Day, August is generally quiet in Washington, but the SEC will be buzzing.

One aspect of financial reform that I mentioned during the House and Senate negotiations was the potential for increased short sale disclosure. Indeed, Section 929 of the new legislation is an amendment to Section 13(f) disclosures requiring “public disclosure of the name of the issuer and the title, class, CUSIP number and aggregate amount of the number of short sales of each security, and any additional information determined by the Commission following the end of the reporting period. At a minimum, such public disclosure shall occur every month.” The legislation also further outlines manipulative short selling as illegal and adds some clarity for brokers to notify customers “that they may elect not to allow their fully paid securities to be used in connection with short sales. If a broker or dealer uses a customer’s securities in connection with short sales, the broker or dealer shall provide notice to its customer that the broker or dealer may receive compensation in connection with lending the customer’s securities.” So does this mean issuers may gain further insight into shareholder ownership with improved 13(f) filings that include short sale activities? I would like to think so, and NIRI will certainly be working towards this end as the SEC implements this rule. I suggest reading a recent article in Securities Technology Monitor for further discussion of this provision if you are interested in more information.

Last week, I told you about the very important solicitation for comment by the SEC on proxy mechanics. Starting next week and extending for several weeks, I will be taking the SEC’s concept release apart section by section and urging you and your companies to comment on what I believe to be those areas most critical to our profession. The participation of public companies in the SEC comment process is absolutely essential to improving the U.S. proxy system.

In NIRI news this week, I invite both attendees and non-attendees to access session materials, video and audio from the 2010 NIRI Annual Conference available on the NIRI website. An excellent example of the kind of high-impact, immediately actionable content presented at conference are the top career management tips provided by the panel of NIRI member experts assembled for our popular “Advancing from Mid-Career to the Next Level” session.

I also invite you to attend our free member webinar “Issues and Trends in IR Communication” with participation from NIRI Senior Roundtable members and NIRI’s research department. Next week we begin the three part webinar “Creating Compelling Investor Presentations” for the member price of $150 for all three parts. Finally, NIRI will participate in an industry effort coordinated by the CFA Institute to suggest a model Compensation Discussion and Analysis or CD&A for issuers to adopt. I am looking for reviewers to read the proposal and provide comments. If you are interested, please email me. Thank you in advance for your consideration.

Until next week,

Jeff Morgan, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

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National Investor Relations Institute

SEC Will Be Buzzing