SEC

Investors are highly interested in information regarding corporate political spending, says Hillary Sale, JD, securities and corporate governance expert and the Walter D. Coles Professor of Law at Washington University in St. Louis. “The SEC should address the need for transparency in political spending to better inform shareholders and allow them to protect themselves from hidden political agendas in corporate campaign spending,” she says. 

Over the past five years, corporate governance has undergone historic changes. In addition to new policies enacted by state judiciaries and attorneys general, Congress adopted the Sarbanes-Oxley Act, the U.S. Securities and Exchange Commission enacted important securities law reforms, and the New York Stock Exchange and NASDAQ reformed listing standards. The world’s leading experts on corporate governance will come together to discuss the impact of these changes during a conference at Washington University in St. Louis Sept. 29 – Oct. 1.

As the Securities and Exchange Commission debates new rules that would require mutual funds to disclose how fund portfolio managers are compensated, research by two scholars at the Olin School of Business at Washington University in St. Louis shows that money manager pay is more influenced by the success of their firm than the investment performance of their clients. The survey of portfolio managers finds that firm success-factors such as firm profitability have more impact on portfolio managers’ bonuses than client success factors like investment performance, though managers are more likely to be dismissed for poor investment performance.

ParedesWith the final provision of Sarbanes-Oxley now in effect, lawyers are required to report corporate wrongdoing. Although many lawyers are concerned that this may breach attorney/client privilege, Troy Paredes, associate professor of law at the Washington University School of Law, says, “The requirement that lawyers report ‘up the ladder’ if they are aware of a material violation is an important part of the Sarbanes-Oxley reforms.” Paredes notes that lawyers are an important gatekeeper that the market depends on to help oversee management.

Panchapagesan”Decimalization” – the pricing of stocks in dollars and cents instead of fractions – lauded by proponents to be a good thing for investors when it was adopted by the U.S. stock markets in early 2001, is under fire. Critics say it costs institutional investors big. But in a study co-authored by Venkatesh Panchapagesan at Washington University’s Olin School of Business, direct institutional trading costs appear to have declined by about 23 basis points (roughly 5 cents a share) after decimalization. In economic terms, this decrease translates to an average monthly savings of about $133 million in institutional trading costs, the study finds.

PanchapagesanThe issues that confront the Securities and Exchange Commission (SEC) and the U.S. equity markets are highly complex and while the SEC has not set a timetable to resolve these issues, Venkatesh Panchapagesan, Ph.D., a professor of finance at the Olin School of Business at Washington University in St. Louis, says that speedy resolution is imperative for the survival of many markets.

Seligman draws on extensive personal interviews to provide a comprehensive examination of the SEC.