December 17, 2010
Ms. Elizabeth M. Murphy
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549-1090
Re: File Number S7-14-10
Concept Release on the U.S.
Dear Secretary Murphy:
It has been reported recently that a
prominent service provider, Broadridge Financial Solutions, Inc.,
has publicly advocated SEC consideration of regulations requiring
corporate use of electronic “shareholder forum” communications to
promote more effective investor engagement.
The eleven-year experience of the Shareholder Forum (the
organization) supports many of Broadridge’s views about the benefits
of such communication processes, but does not support their view of
a need for new regulations.
The Shareholder Forum has been
conducting forum-type communications since 1999, initially as a
project of the New York Society of Security Analysts intended for
member and public education. Its free, open programs are defined to
address either company-specific investor decisions or public
interest investment issues, and these programs consistently engage
the active participation of all relevant marketplace
decision-makers, including corporate and investor representatives as
well as the professionals concerned with their decisions. These
programs have also been consistently effective in providing fair
access to the information needed for investor decisions about
capital commitments and proxy voting, as well as for decisions about
Notably, the past decade’s
Shareholder Forum programs have been conducted without the new
regulations advocated by Broadridge. As some current members of the
SEC Staff may recall, the policies and practices for early
Shareholder Forum programs were developed very carefully with Staff
guidance to assure compliance with then-existing regulations, and
have required only minor refinements to adapt to our use of new
communication technologies. The only changes in regulations relating
directly to Shareholder Forum communications during this period were
the SEC’s 2008 amendments,
which made it easier for first-time participants to understand
compliance issues and otherwise encouraged the use of electronic
technology for forum-type communications. The current regulations
should therefore be considered clearly satisfactory for purposes of
allowing both corporate and investor participants to fully engage in
the legitimate exchanges of information for which our Shareholder
Forum programs – and forum-type communications conducted by anyone
else – are intended.
All of our Shareholder Forum experience, and particularly in our
specifically relevant program for “E-Meetings” communications,
supports these conclusions:
want to communicate directly with corporate managers.
Most investors, including all types of professional fund managers as
well as individual “retail” investors, prefer to obtain information
directly from a company’s managers rather than through
intermediaries, and forum-type communication processes such as
question-and-answer exchanges are considered the most valuable.
managers want to communicate directly with investors.
Most corporate managers are concerned with competing for capital and
voting support, giving them a practical interest in communicating
directly with investors to understand and respond to their
for communication services justifies a marketplace response.
Both corporate managers and investors can easily justify the costs
of electronic communication services that reduce time requirements
and otherwise expand their access to high value decision-making
Considering these conclusions, there should be no need for SEC
regulations to compel what companies and investors can be expected
to do voluntarily.
SEC actions relating to other
aspects proxy system reform, however, are certainly needed as a
foundation for the desired marketplace response. The existing
complications of an antiquated records management process are a
serious barrier to the application of available communication
technologies. As an example, in the course of the Shareholder
Forum’s “E-Meetings” program it was discovered that the seemingly
simple process of verifying a shareholder’s ownership status for
participating in electronic communications requires access to
multiple sources of records, all of which involve different access
rights and protocols. A special project was able to overcome the
obstacles, but a solution to this single element of the
communication process required a significant technology development
investment that would be unnecessary with a modern, simplified
system for securities ownership records.
Please let me know if you want any more information about the
Shareholder Forum’s experience. I will welcome questions, from the
staff or from other readers, and can be reached by telephone at
212-605-0335 or by email at
December 8, 2010 Securities Technology Monitor: "Broadridge
to SEC: Mandate Use of Social Media;" for direct source
December 1, 2010 Broadridge Financial Solutions, Inc., press
release: "Technology Can Help Regain Investor Confidence in
Markets Says Broadridge CEO -- Remarks Made at Hofstra
Conference on Social Responsibility in Business and
December 1, 2010 Broadridge Financial Solutions, Inc., prepared
remarks of Richard J. Daly, chief executive officer of
Broadridge Financial Solutions: "Leveraging Technology to Create
a New Era of Market Transparency, Participation, and Fairness"
(4 pages, 64 KB, in
17 CFR 240.14a-17; Electronic Shareholder Forums, Release No.
34-57172 (Jan. 18, 2008) [73 FR 4450].