Institutional Investors Call on U.S. Securities and Exchange Commission to Implement Financial Market Reforms

According to a recent news release,

"A coalition of institutional investors from around the globe today released a list of financial market reform priorities that they believe are necessary to protect shareowner rights and bolster investor confidence.

The 14 pension funds and plan sponsors representing $1.6 trillion in assets called on the U.S. Securities and Exchange Commission to complete what they called 'unfinished business' in the wake of the financial crisis.

The list of financial market reform priorities – entitled An Investor’s Framework for the Future: Financial Market Reform Priorities for the SEC – outlines six initiatives that the SEC should complete, including:

Appoint the Investor Advisory Committee to provide the Commission with investors’ perspectives on regulatory issues; appoint the Investor Advocate to champion investor rights.

Renew rulemaking for universal proxy access so that investors can propose directors for boards on a level playing field with management.

Adopt final rules on the remaining executive compensation reforms under the Dodd-Frank Wall Street Reform and Consumer Protection Act;

Continue work on International Financial Reporting Standards to ensure high quality accounting in global markets.

Provide for an accountable and transparent ratings system with full disclosure on data and models used to develop securities ratings. Develop an independent mechanism to track the accuracy and effectiveness of the ratings process and complete the study of financing alternatives for credit rating agencies.

Clarify and ensure compliance with the Commission’s interpretive guidance on climate risk disclosures. Include climate change disclosure and the process for including diversity considerations into the corporate board nomination process in the newly created Investor Advisory Committee’s overall mandate to provide advice and recommendations. Ensure that relevant environmental, social, governance (otherwise known as sustainability issues) and diversity reporting is integrated into financial reporting frameworks."

http://www.calpers.ca.gov/eip-docs/about/press/news/financial-market-reform.pdf

SEC to Discuss Rules Governing Credit-Rating Agencies

According to the Washington Post, "The Securities and Exchange Commission is planning to announce Thursday it will hold a roundtable to discuss how to revamp the rules governing credit-rating agencies, according to people familiar with the matter.

This would be the first step toward addressing problems in the industry and the first public policy initiative taken by new SEC Chairman Mary L. Schapiro since she started at the commission.

Schapiro has raised concerns about credit-rating agencies, which are private firms that have been blessed by the SEC to judge the credit-worthiness of securities. Credit-rating firms gave high grades to many of the mortgage-related securities that turned out to be toxic and have wreaked havoc in the financial crisis.

The roundtable is scheduled for April 15. The three major credit- raters, including -- Standard & Poor's, Fitch Ratings and Moody's, -- and others have been invited to speak.

Schapiro has criticized the way credit-rating firms are paid. Currently, the issuers of securities pay the firms to rate them, which Schapiro has called a conflict-of -interest. She has said it might be better for financial firms to contribute to a pot of money that would be used to pay for calculating ratings."