Republican lawmaker to grill U.S. SEC
over Ackman tactics
BY SARAH N. LYNCH
Thu Jul 24, 2014 12:10am EDT
The U.S. Securities
and Exchange Commission logo adorns an office door at the SEC
headquarters in Washington, June 24, 2011.
(Reuters) - A
U.S. lawmaker will pressure the U.S. Securities and Exchange Commission on
Thursday to consider a raft of reforms, after William Ackman's aggressive
efforts to take over Allergan Inc raised concerns about loose rules
governing disclosure and shareholder voting.
Representative Edward Royce of California plans to grill SEC Corporation
Finance Director Keith Higgins at a House Financial Services hearing.
Among his top
concerns is a rule that lets investors such as Ackman delay publicly
reporting when they have amassed a large stake in a company for days.
"I am especially
interested in the SEC’s process when looking at novel or creative deals
like the announced joint-bid by Valeant Pharmaceuticals and Pershing
Square for Allergan,” Royce said in a statement.
appearance before the committee is an opportunity to make sure that the
Commission is making robust reviews of these sorts of deals to ensure
strong investor protections and market transparency.”
Saat Alety, Royce's spokesman, said that Royce is prepared to take
legislative action if the SEC fails to fix the problem on its own.
months, Royce has been writing letters to the SEC to express concerns
about some unusual maneuvers that Ackman's company Pershing Square Capital
Management has used in its joint effort with Valeant Pharmaceuticals
International Inc to win a $53 billion hostile takeover of Allergan, which
is headquartered near Royce's California district.
In one May
letter, Royce said he was concerned about early efforts by Ackman to call
a non-binding shareholder vote outside of Allergan's typical election
procedures as a way to pressure Allergan to negotiate a deal.
Royce said he
feared this "shadow" election would make it tough for shareholders to
"truly understand what is going on."
dropped plans for a shareholder referendum in May and has since pursued a
more traditional proxy battle.
In a July 2
letter to Royce, SEC Chair Mary Jo White said that the Corporation Finance
division will "continue to consider issues raised by the filing related to
the abandoned shareholder referendum" and "issues raised by any future
filings of a similar nature."
Ackman's tactics have raised a number of regulatory questions, both about
his actions and about hostile takeover bids generally.
It has renewed
calls to fix a SEC rule that affords large investors a 10-day delay before
they must report when they have amassed more than a 5 percent stake in a
Dodd-Frank law authorized the SEC to shorten the reporting period, but so
far the SEC has not taken up the measure.
division is in charge of reviewing financial statements of public
companies and corporate governance matters.
In that role,
his division would oversee a rule-writing on the reporting period and also
review proxy filings and related regulatory matters.
questions on Thursday will touch on just one of what is expected to be a
wide-ranging list of topics at the hearing.
plan to ask Higgins about other matters, from rulemakings required by the
Dodd Frank and JOBS Act laws, to how the SEC oversees proxy advisory
Sarah N. Lynch; Editing by