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 4,000 members represent 2,000 publicly held companies and $5.4 trillion in stock market capitalization.

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SEC Concept Release, Short Selling and IR’s Changing Role in Proxy

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SEC Concept Release, Short Selling and IR’s Changing Role in Proxy

Greetings from California, where I am attending NIRI’s “Introduction to IR,” as well as speaking to three NIRI California chapters this week. I am also stopping by our Annual Conference hotel, the Manchester Grand Hyatt, in San Diego to discuss June Conference plans. It is not too early to start making your plans for this annual NIRI event. With the two-for-one hotel night offer for those arriving pre-conference on Friday night (and receiving Saturday night free), we are seeing many members sign up for early bird registration to save even more money and maximize budget dollars. Now on to Washington news …

Although Congress did not return to session until today, and the Senate remains out until the 19th, Washington was busy last week with President Obama’s return from his holiday. The primary newsmaker in Washington was national security in the wake of the Christmas Day airline bombing attempt. However, other financially-related news made it feel like things were returning to normal.

First was the announcement by Senate Banking Chairman Chris Dodd that he will not seek reelection in the fall. Several other politicians made similar announcements, and a number of interesting conversations have developed as a result. One conversation is related to the difficulty Democrats now face in keeping their Senate majority. However, in reference to Dodd specifically, the conversation has been how this announcement might affect the financial reform he is spearheading in the Senate. Some suggest that his reform efforts can now be much more aggressive since he isn’t concerned about political contributions. Others suggest that he will not want to rock the boat as it is difficult for a lame duck to do much, especially someone who might end up going into private business. I tend to side with those in the second mindset and believe he will continue to try to get a bi-partisan bill through the Senate Banking Committee to the full Senate. My guess is he would rather go out with this accomplishment versus risking a prolonged and damaging debate as happened with healthcare. However, whether it is boom or bust for extensive financial reform chances, we will have to wait a few more weeks.

Last week, I mentioned my hope for a release this month of an SEC concept paper or discussion draft on improved shareholder communications or proxy mechanics. After I made that statement, the SEC did announce a concept paper release, and though I was right on a release, I was ultimately wrong on the subject. Tomorrow the SEC will indeed release a concept paper, but the topic will be market structure and not proxy mechanics. This will still be of interest to IR professionals as it will discuss conceptual changes regarding market trading and structure, including high frequency trading and direct access. I will be discussing some of the impact of this SEC thought piece for IR in the coming weeks. As for the concept release on proxy mechanics, I am told we have to wait a few more months.

I am also hearing, and of much interest to IR professionals, that the long awaited decision on additional short selling measures in the form of a tick test or circuit breaker could be announced as soon as later this month. It will be interesting to see the final decision, as well as the logic for the decision. Everyone in IR is hoping for some indication of a movement towards more short selling disclosure in the future as well. More on this as it develops in the coming weeks.

Now I want to make you aware of a troubling matter that I learned of yesterday. The SEC filed settled insider trading charges yesterday against a NIRI member for using material non-public information for personal gain. This morning I spoke with this individual and accepted his resignation from NIRI, and I am pleased that he recognized his violation of the NIRI Code of Ethics. This incident provides a good reminder that as a condition of membership, every NIRI member agrees to this stringent Code which is grounded in the highest standards of integrity and ethical behavior – our profession demands no less. NIRI has due process for ethics-related matters that involves the NIRI Ethics Council and the NIRI Board of Directors. NIRI tolerates no deviations from our Ethics Code, and although we have had very few membership terminations resulting from ethics violations, NIRI will not hesitate to take this action if warranted.

Finally this week, I want to bring your attention a very important upcoming member webinar. Last month the SEC announced new disclosures related to directors, compensation, risk and voting results. Next Tuesday we will host a webinar to talk about these changes as well as how IR is evolving to meet the challenges through increased involvement in the proxy process. If you can’t attend the live event, it will be available to members in archival form. Register now and plan to attend.

Until next week,

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

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National Investor Relations Institute

SEC Concept Release, Short Selling and IR’s Changing Role in Proxy