Friend and fellow blogger Ed Hauder apparently resurfaced after another grueling proxy season today, making five different posts to his always excellent blog. I want to draw attention to two topics in the posts:
- Bad Day at the Office for ISS. "Schadenfreude" is a German term for pleasure derived from the misfortunes of others. Ed posts an article from The Wall Street Journal on the declining influence of proxy advisors and an SEC press release from this morning announcing that is has charged ISS "for failing to safeguard the confidential proxy voting information of clients participating in a number of significant proxy contests." As noted in the release, an SEC investigation found that an employee at ISS provided a proxy solicitor with material, nonpublic information revealing how more than 100 ISS institutional shareholder advisory clients were voting their proxy ballots. In exchange for voting information, the proxy solicitor provided the ISS employee with meals, expensive tickets to concerts and sporting events, and an airline ticket. The breach was made possible in part because ISS lacked sufficient controls over employee access to confidential client vote information, as this employee gathered the data by logging into the ISS voting website from home or work and using his personal e-mail account to communicate details to the proxy solicitor. The employee no longer works at ISS.
- Big Lots CEO Exonerated for Rule 10b5-1 Trading Plan. I have been writing and speaking a "lot" on the topic of 10b5-1 Plans, so it is appropriate to highlight some good news – a 10b5-1 success story. Last year the SEC began investigating a $10 million stock sale by the Big Lots' CEO, which preceded an eventual drop in the company's stock price. This week, the Division of Enforcement advised counsel to the company that: "This investigation has been completed as to your client, Big Lots, against which we do not intend to recommend any enforcement action by the Commission." I guess the 10b5-1 Plan worked. However, as Ed noted, while the initial investigation produced headlines, the exoneration produced nothing.