As elected representatives in the US enter the final stages of merging the two competing financial services reform bills, investors are becoming increasingly anxious that their key reform proposal, access to the proxy, will be rendered useless.

From the outset, both the House and Senate versions of the reform bills have either supported or required the SEC to adopt some form of proxy access, leaving it will be up to the SEC to decide on the implementation details.  A last minute amendment proposed at the end of last week introduced a 5% and two year ownership threshold for a single shareholder to be able to nominate their own directors. As the Council of Institutional Investors pointed out in an open letter to Barney Frank, Chairman of the House Committee on Financial Services:  “even if the 10 largest public pension funds in the nation were to successfully aggregate their holdings of a single public company’s shares, those funds combined would rarely if ever be able to clear a five percent hurdle.”

According to US press reports, Senator Dodd proposed the limits at the request of the White House, in response to the lobbying efforts of the Business Roundtable and others which has been concerned about the authority of the SEC to implement proxy access rules. Valerie Jarrett, a senior White House adviser and according to US media, an Obama confidante, is the administration liaison to the Business Roundtable.

The irony of the White House’s involvement in watering down proxy access will not be lost on BP investors who earlier this year lobbied the company on its oil tar sands projects through a shareholder resolution process.

Last Updated: 22 June 2010