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Campos Discusses Electronic Proxies and Regulation NMS

In a recent speech at the Securities Industry Association's operations conference, SEC Commissioner Roel Campos discussed a number of issues under consideration at the SEC and noted that, while many may appear domestic in nature, the SEC can no longer limit its analysis of the issues to the U.S. He said the SEC must also consider measures underway by its foreign counterparts in the global marketplace, particularly in the areas of self-regulation and international market consolidation.

Campos reviewed the SEC's proposed Internet proxy rules which were anticipated to reduce the costs of proxy contests, but noted that the comment letters have suggested that cost savings may not result. Commenters have submitted data suggesting that the printing and mailing of proxy materials is a minor percentage of the overall costs associated with proxy contests. Campos also cited survey data which found that investors would be less likely to vote if the proposed rules are adopted. He had expressed concerns when the proposal was presented to the Commission about the separation of the proxy card from the rest of the proxy materials and whether shareholders would vote without reading the proxy materials.

Campos said the comment letters have raised a number of concerns about the Internet proxy proposal, but he is committed to finding a solution. If the SEC can address the issues raised by commenters, he believes the rule has the potential to reduce costs and improve efficiency in the delivery of proxy materials.

Campos also talked about the revolutionary nature of Regulation NMS. The compliance dates for Regulation NMS were recently extended. Campos warned that an extension should not be viewed as an opportunity to focus on other issues. When the compliance dates come, Campos said those who are not ready will have unprotected quotes. He encouraged industry participants to contact the staff about any problems that arise as the implementation process proceeds. That way, the staff can provide any necessary guidance to help ensure that everyone stays on schedule. Campos said he views any delays as "a strike at the investor."

In the area of self-regulation, Campos said he is generally supportive of the SIA's statement of goals and principles related to self-regulatory organization restructuring. He said it is the execution of the goals on which he has yet to reach a conclusion as to the preferred course of action. The SEC must analyze and act upon the alternatives for a system of regulation that accounts for the developments in the marketplace and the changes in ownership structures, according to Campos. "Time's a wastin'," he added.

Campos also noted that whatever new self-regulatory regime is adopted, it must take into account U.S.-foreign combinations. A lot of work remains to update and modify the U.S. regulatory scheme to ensure that it complements the developing, global marketplace while safeguarding investors, he said.