Treasurer Steiner Condemns the Security and Exchange Commission’s (SEC) Decision to Gut Vital Corporate Governance Protections for Investors

Oregon Treasurer Elizabeth Steiner, MD decried today's decision by the Securities and Exchange Commission (SEC) which will make it harder for investors to hold publicly traded companies accountable by forcing shareholders into a system that limits their rights to redress wrongdoing by corporations and keeps corporate misconduct and financial fraud from the public eye.

The SEC shift in policy will allow companies seeking to go public to require that investors resolve claims of fraud or other false statements through mandatory individual arbitration. This change would make it harder for shareholders to pursue class action suits through the court system, shielding companies from the transparency of litigation by shunting shareholder actions into an opaque arbitration process that denies access to information beyond the parties and subjects investors to arbitration decisions that may be inconsistent, subjective, and not bound by legal precedent.

The SEC departed from its standard process by failing to engage in a formal notice and comment process, which would allow those impacted by the change to express their views for consideration by the SEC,

Treasurer Steiner said: 
"A strong, healthy economy depends on fair rules, open information, and clear accountability between businesses and their investors. Today's SEC's decision would hide fraud, weaken accountability, and harm individual investors, from retirees to families saving for college. This change in SEC policy is wrong. To make matters worse, the SEC pushed this policy change through without allowing time for a transparent public discussion. This change is another indication that the federal administration is ready to cut corners and rig outcomes to put consumers and investors at a disadvantage."

In a letter sent to the SEC late yesterday, Treasurer Steiner called on SEC commissioners to reject the policy change and to reject "this fundamental policy change [which] would hurt investors and the integrity of US markets."