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Insiders...

Last week I mentioned legislative plans to prohibit insider trading in Washington. The House and Senate passed different bills, so we will see how they are reconciled in the coming days. Both bills confirm that it is illegal for a member of any branch of government to trade on non-public information. The primary area of difference between the Senate and House is whether to tighten up on hedge funds’ access to "political intelligence" or similar information that might be used for trading purposes. I will let you know how it turns out.

This week I want to note allegations made against an employee of the proxy advisory firm ISS of passing along "inside" information in the form of confidential advance voting data. The New York Post reported on a whistle-blower’s allegations that an ISS employee accepted cash and gifts for this information. NIRI expressed concern about this very matter in a 2010 letter to the SEC on proxy mechanics citing the need for a review of many issues regarding proxy advisory firms. Quoting from this letter, “NIRI is concerned about the lack of transparency of the existence of protocols against gift giving and receiving on the part of firm analysts and others by those seeking to influence the voting recommendation of these firms.” The SEC has indicated that it intends to review the proxy advisory business in 2012, and NIRI and other issuer groups continue to urge the SEC to begin now!

Other issues that crossed my desk recently:
NYSE Retail Changes Delayed. The SEC delayed its decision on a NYSE proposal that would seemingly create a darkpool type environment for retail traders. If approved this change would likely usher in many "me too" proposals by ECN and ATS operators. As I understand the proposal, it would create a retail trading environment similar to darkpool trading and would also share the darkpool characteristic of less trade information transparency. How do Your Tweets Rate? A recent Carnegie Mellon University study of Twitter users found that only 36% of tweets they receive are worth reading! Read this CMU analysis for more information on the factors that resulted in valued content. Consolidated Audit Trail Altered. The SEC’s plans to collect real time information on every single trade have been sidelined due to the expense. A revised system is now in the planning stage that would collect information on a delayed basis and include input from Finra and the exchanges.In closing, I want to remind you early-bird-minded members that the NIRI 2012 Annual Conference early-bird registration discount ends March 11, 2012. So don't delay, register today!

Until next week,

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

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