In Focus

CII Research Arm Publishes Report on Key GameStop Issues

A new CII Research and Education Fund (CII-REF) report addresses three issues at the forefront of policymaking in the wake of the “meme stock” trading frenzy that roiled the U.S. equities market in January 2021. The paper examines 1) potential conflicts of interest in the payment for order flow system in which market makers pay brokers in exchange for routing investors’ trade orders, 2) transparency of short positions and 3) whether to shorten the two-day delay in trade settlement. While the report does not endorse any particular policy actions, it reviews some of the reasons these issues have emerged or resurfaced, and how changes could impact markets positively or negatively. SEC Chair Gary Gensler discussed these and other issues related to wild trading in GameStop, at a Mays 6 hearing on Capitol Hill.

CII Urges Congress to Overturn SEC Shareholder Proposal Rule Amendments

In a letter to leaders of the Senate Banking Committee, CII strongly urged Congress to use the Congressional Review Act (CRA) to overturn the SEC’s 2020 amendments to the shareholder proposal rule, which raised the thresholds for filing and resubmitting proposals. CII said CRA disapproval is appropriate because the amendments would result in a process that is more complicated, more constricting and more costly. In addition, the letter states, the SEC adopted the amendments through a rulemaking process that the agency’s own Investor Advocate found to be fundamentally flawed.

Letter to SEC Chair Gensler Outlines CII Priorities

CII has submitted a letter to SEC Chair Gary Gensler urging the selection of an investor-focused individual for the role of chief accountant. An attached appendix calls for the adoption of a number of existing rulemaking proposals or petitions that would address long-standing investor needs. These include action on clawbacks of unearned executive compensation, 10b5-1 trading plan reform, diversity disclosure, reconciliation of non-GAAP metrics and universal proxies for contested director elections.