Social Investment Forum Urges House-Senate Conferees to Frame Strong Financial Reform Bill
Recommendations Outlined on Corporate Governance, Consumer Financial Protections, SEC Funding and Derivatives
WASHINGTON--The Social Investment Forum (SIF), the national non-profit association of professionals, firms and institutions engaged in socially responsible and sustainable investing (SRI), issued a letter today calling on the U.S. House-Senate financial services reform bill conferees to ensure that several key provisions are included in the final bill.
SIF CEO Lisa Woll wrote: “It has been almost three years since the American economy began to suffer from what has become one of our nation's most severe financial crises and a clear call to action for financial reform. Placed in this context, the much-needed changes being discussed in the House and Senate financial reform bills are long overdue.”
SIF has advocated for a series of measures to combat predatory lending and other weaknesses of the financial sector. SIF's focus has been on: improved corporate governance (granting shareholders rights to nominate alternative candidates to boards, requiring a majority voting standard for the election of board directors, and mandating a shareholder advisory vote on executive compensation); creating a financial regulator dedicated to protecting consumers; regulation and oversight of all investment products including hedge funds and derivatives; providing sufficient resources to regulators, with a particular focus on adequate funding for the Securities and Exchange Commission (SEC); creation of a systemic risk regulator; and enhanced oversight and higher standards of accountability for credit rating agencies.
As the bill goes to the House-Senate conference committee, our priority issues for conference committee are:
• Board practices—Board directors need to be held to a majority voting standard and shareholders must be given access to the proxy to facilitate their nomination of alternative candidates.
• Executive compensation—Stockholders also require an advisory vote on executive compensation, independent board compensation committees, full disclosure of “golden parachutes” paid to executives and pay disparity trends, and rights to take back ill-gotten bonuses from executives based on false financial statements.
• Consumer financial protection—Consumers need a strong, independent, well-funded regulator in Washington to help protect them from predatory lending and other poor business practices in consumer financial markets.
• SEC funding—With the increasing complexity of financial markets and with considerable new responsibilities, included in the financial reform bill, the Securities and Exchange Commission (SEC) needs adequate funding. We believe the best approach is self funding.
• Derivatives—The $600 trillion derivatives market must become more transparent with exchange trading and requires far greater accountability with capital and clearing requirements.
• Broker voting—Brokers should not be able to cast votes for customers who fail to provide voting instructions. Therefore, stock exchanges should strengthen their listing requirements to prohibit brokers from voting the uninstructed shares of their clients on specified matters such as director elections, executive compensation or any other “significant matter” as determined by the SEC.
The Social Investment Forum (http://www.socialinvest.org) advances investment practices that consider environmental, social and corporate governance criteria to generate long-term competitive financial returns and positive societal impact. The Social Investment Forum is the U.S. membership association for professionals, firms, institutions and organizations engaged in socially responsible and sustainable investing (SRI). SIF members support SRI through such strategies as portfolio selection analysis, shareholder advocacy and community investing.