Developments in Securities Regulation, Corporate Governance, Capital Markets, M&A and Other Topics of Interest. MORE

The SEC Office of Investor Advocate has recommended disapproval of a proposed rule change of the New York Stock Exchange. In its proposed rulemaking, the NYSE would exempt certain early stage companies from having to obtain shareholder approval before selling additional shares to insiders and other related parties.  The Office of the Investor Advocate was created with a statutory mandate to examine the impacts on investors of proposed rule changes by self-regulatory organizations, including the national securities exchanges, and to make recommendations to the Commission regarding those proposals.

According to the Office, the Commission maintains a thorough review process for exchange filings, and the Commission staff carefully scrutinizes each filing under the federal securities laws. The Office believes given the general lack of awareness of such filings among investors, the exchanges may have come to expect little scrutiny from investors of their routine proposals. According to the Office, “Those days are now over. Today I make my first formal recommendation to the Commission, and it marks the beginning of my Office’s efforts to shine a brighter light on rule changes by the exchanges, either to oppose proposals that may be detrimental to investors or, conversely, to support the efforts of exchanges to amend their rules in ways that benefit investors.”


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