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SEC chairman Mary L. Schapiro

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Institutional investors Call on SEC to implement financial market reforms

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A coalition of institutional investors from has released a list of financial market reform priorities that they believe are necessary to protect shareowner rights and bolster investor confidence.

The 14 pension funds and plan sponsors representing USD1.6 trillion in assets called on the US Securities and Exchange Commission (SEC) to complete what they called “unfinished business” in the wake of the financial crisis.

“We encourage the Commission to continue work on a proactive agenda advancing your mission to protect investors, maintain fair, orderly, and efficient markets, and to facilitate sustainable capital markets,” wrote the investor group in a letter to Mary Schapiro (pictured), Chair of the SEC. “Despite the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act, we believe there is unfinished business that is critical to protecting and strengthening shareowner rights and investor confidence in the financial markets.”

The list of financial market reform priorities – entitled An Investor’s Framework for the Future: Financial Market Reform Priorities for the SEC – outlines six initiatives that the SEC should complete, including:

Appoint the Investor Advisory Committee to provide the Commission with investors’ perspectives on regulatory issues; appoint the Investor Advocate to champion investor rights.

Renew rulemaking for universal proxy access so that investors can propose directors for boards on a level playing field with management.

Adopt final rules on the remaining executive compensation reforms under the Dodd-Frank Wall Street Reform and Consumer Protection Act;

Continue work on International Financial Reporting Standards to ensure high quality accounting in global markets.

Provide for an accountable and transparent ratings system with full disclosure on data and models used to develop securities ratings. Develop an independent mechanism to track the accuracy and effectiveness of the ratings process and complete the study of financing alternatives for credit rating agencies.

Clarify and ensure compliance with the Commission’s interpretive guidance on climate risk disclosures. Include climate change disclosure and the process for including diversity considerations into the corporate board nomination process in the newly created Investor Advisory Committee’s overall mandate to provide advice and recommendations. Ensure that relevant environmental, social, governance (otherwise known as sustainability issues) and diversity reporting is integrated into financial reporting frameworks.

“The Commission plays a vital role in bolstering investor confidence in the public markets by adding transparency for investors, enforcing director independence, and enhancing governance. The undersigned stand ready to assist the Commission to combat efforts to weaken or roll back the important investor protection provisions of Dodd-Frank,” wrote the investor group.

Investors signing the letter include:
AustralianSuper Pty Ltd
All Pensions Group (APG)
BT Pension Scheme Management Ltd
California Public Employees’ Retirement System
California State Teachers’ Retirement System
Connecticut Retirement Plans and Trust Funds
Co-operative Asset Management
Florida State Board of Administration
F&C Management Ltd.
Office of New York City Comptroller
Ohio Public Employees’ Retirement System
PGGM Vermogensbeheer B.V. (PGGM)
RPMI Railpen
Universities Superannuation Scheme (USS)
 

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