Did The SEC Really Have Good Cause To Grant Accelerated Approval Of Amendments To NYSE Rule 452?


On September 9, 2010, the Securities and Exchange Commission granted accelerated approval of the New York Stock Exchange’s proposed amendments to Rule 452. Echoing the Queen of Hearts (“Sentence first – verdict afterwards”), the SEC at the same time announced that it was soliciting comments on the “proposed” rule change.

The NYSE proposed the rule to meet the requirements of Section 957 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Section 957 requires the rules of each national securities exchange to prohibit any member organization that is not the beneficial owner of a security registered under Section 12 of the Securities Exchange Act of 1934 from granting a proxy to vote the security in connection with certain stockholder votes, unless the beneficial owner of the security has instructed the member organization to vote the proxy in accordance with the voting instructions of the beneficial owner. The votes covered by Section 957 are votes with respect to the election of a member of the board of directors of an issuer (with one exception applicable to investment companies), executive compensation, or any other significant matter, as determined by the Commission, by rule.

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