SEC Seeks Power to Regulate Bank Proxy Distribution; Says Institutions Don't Report Information in Timely Manner

Article excerpt

WSHINGTON -- The Securities and Exchange Commission is asking Congress for authority to regulate the way banks and thrifts distribute proxy material regarding securities they are holding for customers.

Individual investors often request their bank or broker to hold their corporate shares. The institution usually maintains those shares in its own name and withholds the name of the individual shareholder, or beneficiary.

As a result, corporations complain it is sometimes impossible to identify individual shareholders because shares are listed in the name of the financial institution, or nominee. That, issuers say, sometimes makes it difficult to administer proxy votes.

Starting next January, the SEC will require brokers to divulge to an issuing company names, addresses, and securities positions of shareholders who consent to such disclosures.

At a meeting last week, the SEC said it would ask Congress for permission to apply the same disclosure standards to banks and thrifts that holds stocks for customers.

Currently, neither the SEC nor federal bank regulators have the power to oversee the processing of proxies at banks and thirfts.

The agency also is seeking the authority to require banks and thrifts to quickly distribute proxy statements, as brokers do, under SEC rules.

Specifically, brokers must now inform an issuing company how many proxy statements are needed within seven days of the issuer's initial inquiry. After receiving the material, brokers have five days to relay that literature to shareholders.

But these rules do not apply to bank trust departments, thrift institutions, or other kinds of financial firms. …