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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Unsettled Washington, Climate Change Disclosure and Issuer Repurchases

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Unsettled Washington, Climate Change Disclosure and Issuer Repurchases

This past week was very active at the SEC, but before I brief you on the SEC actions, let me update you on the politics of Washington:

• Obama’s “Rescue, Rebuild, Restore America” State of the Union speech seems to have been met by Washington insiders and the American public with both politeness and a resounding “prove it” that things will change.

• Ben Bernanke was indeed confirmed for a second term as Federal Reserve Chair, but was (and many say unfairly) bruised in the process, becoming a scapegoat for Congress and others.

• Blame continues with many in Congress (Democrats and Republicans alike) calling for Tim Geithner’s removal as Treasury Secretary, but Geithner coming on strong defending his actions. Many wonder if Congress is looking for scapegoats to avoid self blame.

• Things remain unsettled in Washington and in the markets since the Republican Brown’s Massachusetts Senate win. Blame, finger pointing and a complete loss of focus in Washington seems to have placed everything into question. Frankly, I am amazed at the continuing impact of this election.

Now on to IR news from SEC:

• The SEC approved interpretive guidance on climate change disclosure providing more information on existing corporate disclosure requirements related to a “material risk” for companies. The yet to be issued release will go into more depth on expected climate disclosure related to:

      > The legislative impact of existing climate change laws to your company,
      > International accords and treaty impact as it relates to climate change,
      > Indirect business trends or consequences related to climate change, and
      > Physical impact of climate change on your business.

The Commission approved this release with a 3-2 vote. Dissenting Republican Commissioners implied political motivation, while investor groups applauded the SEC effort. NIRI will pass along more information on the interpretative release once issued by the SEC in the next few days.

• The SEC proposed changes to Rule 10b-18 for stock repurchases by issuers. If your company is involved in repurchases, I suggest you and your CFO read and comment on this proposal as it has several attractive possibilities for companies, including the ability to repurchase at potentially a lower price. While I don’t profess to be an expert, it also seems to me that there is a question (on page 23) on whether issuers should have the ability to use the mid-point of the national best bid and offer or “mid-peg” price. Conceivably, if approved, that could give issuers that ability to use darkpools for stock repurchases. NIRI does not have a position on this matter, but urge you and your CFO to discuss commenting to the SEC, as the issuer’s voice on this matter could be very significant in helping the SEC to decide final action. Comments are due by March 1st.

• On the exchange front, major U.S. stock exchanges are urging the SEC to allow price quotes in smaller increments – sub-penny or a tenth of a cent. This change is desired to allow exchanges to be more competitive with darkpools. Yes, it was just 10 years ago (2001) when we gave up eighths of a dollar quotes!

• Under the Open Government Directive, the Obama administration has directed governmental agencies “to take immediate steps to open their doors and data to the American people.” The SEC has been one of the first to make information available with Fails-to-Deliver data among other data sets.

• Barney Frank is considering a bill requiring mutual funds and other large institutional investors that act as fiduciaries to be transparent about how they vote their proxies and disclose their votes.

• Speaking of the proxy, the Altman Group compiled and published a summary of those who commented on proxy access during the recent SEC re-opened comment period.

Finally this week, I want to call your attention to a NYSE/NIRI video webcast tomorrow on the Convergence of IR and Governance at 4:00 p.m. Eastern. I look forward to participating as a panelist.

Until next week,

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

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Unsettled Washington, Climate Change Disclosure and Issuer Repurchases