Mohammed Ali Rashid
Mohammed Ali Rashid’s Comments on S7- 24-16 Reopening of Comment Period for Universal Proxy There is an old saying which advises that "If it ain't broke, don't fix it". At first glance, the proposed new SEC rule 34-91603 regarding changes in how universal proxy cards are to be used with regards to putting forward contested slates of directors and various other matters would seem to be an obvious example of this axiom. In no part of this solicitation for public comment regarding the proposed rule change is there even the slightest hint that this alteration is coming in response to some form of public pressure or to cure some kind of obvious abuse of the current rules. Without some kind of outcry to bring it to their attention and demand action if myself Ali Rashid can be fomented imagine others? As it seems that the SEC is fomenting this departure from existing practice for reasons of their own. Put another way, since the public has shown no sign of caring about this issue and no grotesque abuse has come to anybody's attention, it is necessary to fall back on still another old saying in order to figure out what is really happening here. And that saying is: "Cui bono?" Who benefits? Reading through the SEC briefing sheet, it is very clear that who is presumed to benefit by this new rule and who actually benefits are two separate categories of people. So let's look at the announced list of beneficiaries first. In this category we find that the SEC announces that it is their sworn duty to "facilitate" the exercise of shareholder voting rights. This is their cover story for justifying why they are proposing changes. It is to make it easier for ordinary shareholders to participate in the election of company officers. For anybody who stops reading right there, it sounds like an idealistic and considerate thing for the SEC to be doing in order to safeguard the interests of common investors. This is to be accomplished through the medium of a universal proxy card that retail investors can fill out at their leisure at home. By liberating them from the need to attend the annual meeting in a distant metropolis in order to make their voice heard, it would seem on the face of it that this is a great step forward in favor of the Little Guy. But is this really true? As always, it is not the intent but the legislative language that rules. In this case, the supposed reform of simplifying and standardizing proxy rules comes with one big catch that is hidden deep inside the proposal. Neither the SEC, nor any corporate entity, cares one way or another how proxy votes are tallied. What matters is actually a question of who is allowed onto the ballot.
