Over the past several weeks, I have shared with you various thoughts about the JOBS Act, the new law that promotes crowdfunding, and impacts IPOs by changing disclosure requirements and research reporting for them among other things. This week I want to mention a new implication identified by Robert Pozen (Harvard Business School lecturer and senior fellow at the Brookings Institute) in a Financial Times editorial. Bob points a finger at hedge funds describing how the JOBS Act will loosen hedge fund regulation enabling them to grow and begin to advertise. Most hedge funds generally ensure their shareholder base remains below the 500 threshold, but that could now grow to almost 2,000 under to the JOBS Act. In addition, the JOBS Act removes barriers on “general advertising” for private offerings, such as hedge funds. Our financial markets continue to change, and NIRI is here to help you through these changes with education, information, community and advocacy.

Some other things that crossed my desk this past week:

President Obama officially announced his candidacy for President last week, and with little to stop Mitt Romney from becoming the Republican nominee, the stage is set! The candidates, the news media and an onslaught of advertising will compare and contrast how America will be better off with one or the other for the next six months. IR professionals will likely be more influenced by the House and Senate elections that will occur simultaneously. These races will have a larger impact on the laws that will be written during the upcoming four years that touch our personal and professional lives. Hang on to your seat for the next six months!

A few other things that crossed my desk last week:

Yesterday NIRI issued an updated version of the Standards of Practice for Investor Relations on Disclosure. Check out the newest segment of our video webcast series IR Today devoted to the topic. NIRI’s first issued a “standard” in 1996 and over the course of the last fifteen years has issued standards on earnings press releases, notice and access along with disclosure. A lot has changed (and has not changed) since the last edition of the disclosure standards. Members can access this in soft copy or purchase a hard copy (also available to non-members) on the NIRI Standards of Practice page.

It takes a small community to develop a standard of practice. I thank the NIRI member Working Group for their time and expertise in developing this excellent resource: Derek Cole, current NIRI Board Chairman; Mary Beth Kissane, Principal, Walek & Associates; Jane W. McCahon, Vice President – Corporate Relations, Telephone and Data Systems, Inc.; and Maureen Wolff, President & Partner, Sharon Merrill Associates, Inc.

I also appreciate the many attorney contributors: Brian Breheny, Skadden, Arps, Slate, Meagher & Flom LLP; Stephen Cooke and Michael Zuppone, Paul Hastings LLP; Brent Fassett, Cooley LLP; Andrew Moore, Perkins Coie LLP; Lawrence Levin and Maryann Waryjas, Katten Muchin Rosenman LLP; and Frank Zarb and Liz Crimer, Proskauer Rose LLP.

Our OneNIRI 2012-2015 strategic vision renews NIRI’s focus on IR practice and standards like these. We plan to evolve the standards development process, issuing standards more frequently and enlisting your assistance through an open source (similar to a wiki) model. This will allow for a larger community of participation, while still using legal and other experts to provide a backbone of expertise.

Many have asked me about the need for global standards for IR. While each country has its own laws and regulations guiding certain aspects of the interaction between investors, potential investors and the press, I think it is a valid thought. As our financial markets continue to evolve, I can see global investors demanding certain common IR practices regardless of domicile. An open source model for development could be just the solution for creating those global standards.

As I close this week, you may have seen some changes to NIRI’s eGroup private online community that we made last week. Members tell me they find this platform for sharing challenges and issues to be extremely valuable. We continue to watch and evaluate other social media platforms to provide you the best home for this type of sharing. NIRI is a community and I appreciate everyone’s behavior on eGroups. Flaming, advertising and other unprofessional online behaviors have never been a problem within NIRI as our community prides itself on supporting and learning from each other. All of you make NIRI the place to be for IR information, professional development, advocacy and community.

Until next week,

Jeff Morgan, FASAE, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

Readers of my regular weekly updates know that issuers desire proxy advisor reform in areas such as ensuring these firms use accurate corporate information, and eliminating potential proxy advisor conflicts of interests. Glass Lewis took a step this past week towards improving interaction with companies by announcing a new issuer portal designed “to enhance communication and understanding” between the firm and issuers. While this portal doesn’t resolve all issuer complaints, it is a small step in the right direction.

Other items that crossed my desk included:

This past week, the President signed into law the JOBS Act and NIRI issued an Executive Alert on the matter. Initially, counselor members with IPO clients will be most interested as existing publicly-traded companies are not affected. Regardless, you should be aware of the dramatic changes in the capital formation process that the new law creates.

I continue to see a great deal of finger wagging about potential problems – for instance, that the new law waters down the 2003 settlement involving conflicts of interest by research analysts that created a Chinese wall between investment bankers and research analysts. Or that it has caused many, including the SEC, to express concern over potential problems.

Some investors are planning to demand as a condition of investment that new IPOs opt out of JOBS Act elements that lower reporting thresholds and, instead, comply with existing public company disclosure requirements.

Meanwhile, crowdfunding becomes a new mainstream term for private company capital raising to obtain potentially many shareholders before stepping into the public markets. Crowdfunding services, like this one or this one, have quickly sprung up. And yes there is even a new National Crowdfunding Association. Images of the Wild West on steroids come to my mind!

In other news that crossed my desk last week:

President Obama is expected to sign the JOBS Act into law this week to promote growth among young companies and ultimately increase IPOs. I continue to be concerned by some of the potential disclosure imperfections of the law as noted in The Economist and The Wall Street Journal, but we all hope that this will spur IPO growth. One of the unintended outcomes is more work for the SEC to implement the various provisions. So that means Dodd-Frank implementation timelines will likely be readjusted again from currently posted dates. On this topic, the SEC has indicated that its review of proxy advisors will result in an interpretive release which likely limits the impact of potential changes and will probably disappoint issuers. But efforts continue by NIRI, the Shareholder Communications Coalition and other groups to spur broader action by the SEC.

Other notable items that crossed my desk last week include:

Action in Washington centered around the Senate last week as it passed and sent the STOCK Act to President Obama for signature. This bill which prohibits insider trading by congressional and executive branch officials and employees is, in my opinion, long overdue. It has taken about five years to get to this point, but will finally become law.

The Senate also passed the JOBS Act, legislation that was widely criticized as giving up too much investor protection (see my March 20, 2012 message for details). This bill is slightly different from the version approved by the House, but should be on the President’s desk shortly. NIRI will issue an Executive Alert when signed into law. While companies that are already public will not likely benefit from this legislation that makes it easier to access capital and pursue an IPO, you should still be aware of the changes. Counselor members that work with new IPO clients will want to become familiar with it.

For those following the crowdfunding movement, the JOBS Act will push this funding mechanism into the mainstream. This fledgling industry is angling to self-regulate to avoid too much SEC scrutiny.

Here are several other notable items that came across my desk last week:

Last week I mentioned the JOBS bill which the House, but not the Senate, has passed. I also mentioned some of the provisions considered of interest to IR professionals. The relaxation of investor protections – exempting companies with less than $1 billion in sales from certain SOX rules for five years – has created concern as the Senate considers the bill. As this article points out, “Of 1,827 companies that have launched IPOs since 2004, 563, or about 31%, had to restate figures in post-IPO financial statements. That is higher than what experts say is a broader restatement rate of about 22%. The bulk of financial restatements occur in companies that would face relaxed rules under the bill in Congress, securities experts said.” SEC Chair Schapiro also has concerns over how this bill would negatively affect overall investor protections.

Other concerns about the House version include crowdfunding provisions. In my opinion, quadrupling the private company threshold from 500 to 2,000 shareholders seems like a very large and potentially dangerous change. The Senate is now considering the bill and sources report that this remains in flux. I expect that some form of this bill will ultimately become law in the coming weeks. We will continue to watch and report as this develops.

Other items that crossed my desk last week included:

On Thursday, the House passed the bipartisan JOBS (Jumpstart Our Business Startups) Act (H.R. 3606). Senate leaders say they will pass their version soon, and President Obama must ultimately sign the bill which he says he will do ASAP. Several elements will likely interest IR professionals because the bill is intended to increase IPOs, although some feel it will also diminish certain investor protections. The House bill includes a reduction of SOX requirements for companies with less than $1 billion in revenue and $700 million market cap. These companies will be exempt from external audits of internal controls, certain accounting rules and executive-pay disclosures. The House bill also includes a change permitting private companies to have up to 2,000 shareholders (up from 500) before becoming public. NIRI will release final details when President Obama signs the bill into law.

A few other things that crossed my desk last week:

You may be aware of the organization Financial Executives International (FEI) as I suspect many of your CFOs are FEI members. Last week FEI announced its advocacy issues for 2012. While NIRI’s advocacy issues include shareholder transparency, shareholder communications, proxy advisory services, market volatility and capital markets growth, FEI is pursuing tax, financial and other governmental reform issues. One issue that really surprised me was their XBRL endorsement.

FEI’s policy states, “The adoption of XBRL would enable efficiencies in the recording and reporting of financial information, while reducing compliance and reporting costs for both the federal government and the private sector.” NIRI doesn’t have a policy regarding XBRL and as I speak to IR professionals I don’t hear enthusiasm, but rather continued complaints about the high costs of data tagging and perceived lack of external users. I suggest asking your CFO to explain his or her view so that you will better understand why the corporate CFO community so strongly supports XBRL.

Organizations that support XBRL see corporate actions as the next use and would have companies absorb the cost for transforming this information into a data format. This way it can be easily consumed by those tracking dividends, stock splits, etc. So as you are speaking to your enthusiastic CFO, you might help him or her understand what’s next for companies from the proponents of XBRL tagging.

As I mentioned earlier, NIRI has no stated position on XBRL. In my opinion, this matter was resolved by the SEC when the agency mandated XBRL several years ago. During these times of Dodd-Frank implementation, market volatility and the need to improve capital formation, I can’t imagine the SEC placing the expansion (or reversal) of XBRL high on its agenda. But for IR professionals, it is good to stay on top of current events, and I wanted you to be aware of this item that CFOs feel strongly enough about to adopt in their advocacy agenda. As you discuss XBRL with your CFO, you should share the items NIRI has placed high on its advocacy agenda. I hope it makes for a healthy conversation.

Until next week,

Jeff Morgan, FASAE, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

A conference in D.C. last week brought out all five SEC commissioners and, in my opinion, their speech topics spoke volumes about each. Chairman Schapiro discussed the SEC’s regulatory agenda and how she is prioritizing items including upcoming conflict minerals disclosure and a consolidated trading audit trail. Commissioners Paredes and Aguilar used the opportunity to personally reflect on where the SEC should concentrate its efforts. Paredes called for a lighter touch on the Volcker rule for banks. Aguilar wants the SEC to require full disclosure of all corporate political spending. With her term ending in June, Commissioner Walter reflected on her tenure. The newest Commissioner Gallagher discussed “failure to supervise” liability for compliance and legal personnel at broker-dealers and investment advisers, as he learns the ropes in his new role.

A few things that crossed my desk last week included:

I am very pleased and excited to announce the launch of NIRI’s new video webcast series, IR Today. Our first webcast can be seen on the NIRI website and new programs will be released several times during the year. This series is produced with the generous support and assistance of Corporate Board Member, who will be a knowledge partner for our broadcasts. TK Kerstetter, President of Corporate Board Member and host of This Week in the Boardroom, joins Derek Cole, NIRI's Chair and VP of IR and Corporate Communications for ARCA biopharma, in our first broadcast to discuss the state of the IR profession. NIRI is a contributing partner of This Week in the Boardroom. NIRI videos are also available on the the NIRI YouTube Channel.

IR Today will feature IR professionals discussing issues critical to the profession and NIRI-related topics. Our programs will appeal not only to IR professionals and financial communicators, but will also be made available to corporate boards via our partnership with Corporate Board Member. This is a great opportunity to leverage video in serving NIRI members (as outlined in our OneNIRI strategic plan), and to highlight the importance of IR to corporate boards and the C-Suite.

Now on to a few other things that crossed my desk last week:

Last week I mentioned legislative plans to prohibit insider trading in Washington. The House and Senate passed different bills, so we will see how they are reconciled in the coming days. Both bills confirm that it is illegal for a member of any branch of government to trade on non-public information. The primary area of difference between the Senate and House is whether to tighten up on hedge funds’ access to "political intelligence" or similar information that might be used for trading purposes. I will let you know how it turns out.

This week I want to note allegations made against an employee of the proxy advisory firm ISS of passing along "inside" information in the form of confidential advance voting data. The New York Post reported on a whistle-blower’s allegations that an ISS employee accepted cash and gifts for this information. NIRI expressed concern about this very matter in a 2010 letter to the SEC on proxy mechanics citing the need for a review of many issues regarding proxy advisory firms. Quoting from this letter, “NIRI is concerned about the lack of transparency of the existence of protocols against gift giving and receiving on the part of firm analysts and others by those seeking to influence the voting recommendation of these firms.” The SEC has indicated that it intends to review the proxy advisory business in 2012, and NIRI and other issuer groups continue to urge the SEC to begin now!

Other issues that crossed my desk recently:

Last week the U.S. Senate passed a bill to ban insider trading by congressional representatives and their staff members who have access to non-public information. While some in Washington have said this is unreasonable, others have said the practice is already illegal and still others have used it to open up a wider ethics debate. For IR professionals who deal with non-public information every day, ensuring insider trading is banned in Washington seems logical. But read on! Under the Senate version, the executive branch would not have to provide detailed monthly disclosures of stock trades, while Congress must. With the House of Representatives taking the bill up this week and pledging to strengthen it, the discussion should be interesting.

What is important for companies and IR professionals to know is that there is a belief that in much the same manner as “expert networks” can be used to feed hedge funds and others with inside information about companies, lobbying firms (in particular) can pass along “political intelligence” to their clients. This might, for example, be inside information on pending legislation affecting an industry or certain companies. The clients receiving this information may be companies, competitors and even hedge funds (who could use the information for trading purposes). Many corporate entities may have lobbying firms to help them, but don’t assume there isn’t an entirely different use for those whispers of confidential information in Washington. In other news that crossed my desk last week:

The last change to NYSE Rule 452 was in 2010 when the SEC approved an amendment eliminating broker discretionary voting on director elections. New 452 changes surprised issuers last week when the NYSE implemented another change to Rule 452 eliminating discretionary broker voting on corporate governance matters without specific client instructions.

NYSE points to Washington as the reason for the move, “In light of these and other recent congressional and public policy trends disfavoring broker voting of uninstructed shares, the Exchange has determined that it will no longer continue its previous approach under Rule 452 of allowing member organizations to vote on such proposals without specific client instructions. Accordingly, proposals that the Exchange previously ruled as “Broker May Vote” including, for example, proposals to de-stagger the board of directors, majority voting in the election of directors, eliminating supermajority voting requirements, providing for the use of consents, providing rights to call a special meeting, and certain types of anti-takeover provision overrides, that are included on proxy statements going forward will be treated as “Broker May Not Vote” matters.”

While broker discretionary voting is still helpful in ensuring quorum at annual meetings (through auditor ratification for example), use beyond this function has been dramatically curtailed over the last few years. If you follow NIRI’s advocacy efforts, you will recall the SEC eventually plans to further examine proxy mechanics. Specific issues include considering improvements to shareholder communications, evaluating OBO/NOBO after decades of market evolution, efforts to improve retail investor voting and contemplating client directed voting. The SEC has put these ideas out for discussion but has not yet moved on any of them.

In my opinion, this latest 452 change shows the challenges in our regulatory system, not the least of which is that Dodd-Frank rulemaking is overwhelming the agenda. Regulatory actions that might create a better system between investors, companies and other market participants are being sidelined if not part of Dodd-Frank. In this case, the change was made without a public comment period – or a public SEC approval process. Issuers had no opportunity to make any public case regarding the change.

As your advocate, I want not only to share the news but also a bit of my frustration. I hope tomorrow will be a better day.

Until next week,

Jeff Morgan, FASAE, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

One Dodd-Frank regulation the SEC will work towards completing in 2012 is a requirement for companies to disclose average compensation of employees compared to CEO compensation and stock price. Based upon the how the law is currently written, implementation will create many challenges for companies. NIRI recently joined more than 20 other organizations requesting the SEC exercise care and prudence as it considers the required rulemaking.

Here are a few other items that crossed my desk this past week:

Congress returns to DC this week from holiday recess, and one of its first items of business will be to act on the federal government’s borrowing authority. If it seems like this is déjà vu, you are right! We can expect much political rhetoric accompanying the approval action. This discussion and news of S&P European downgrades may mean U.S. market volatility will return. Regardless, here are a few relevant items that crossed my desk last week:

With Congress returning to Washington next week, the Iowa caucuses remind us that 2012 will witness elections for the U.S. presidency, 33 Senate seats and the entire House of Representatives. It is unlikely we will forget this as we endure the more than 10 month process. However, regulators are already busy at work. For the SEC, Dodd-Frank is still a huge agenda item as the agency updated the implementation timeline for the next year.

I kick off my 2012 chapter visits tonight at the NIRI Los Angeles chapter and will speak on how all of this will impact IR, as well as our OneNIRI vision for the next few years. I look forward to seeing many in L.A.

A few other things that crossed my desk this past week included:

Happy New Year - welcome to 2012!

Who knows what 2012 has in store for each of us? Chances are that it will bring some unexpected twists and turns in our personal and professional lives. In your professional life, you can count on NIRI as your IR home. We will be there to help prepare and assist you to successfully weave through those professional challenges by providing, among other things, a wealth of professional development opportunities. So I hope you have a 2012 professional development plan in mind that includes NIRI educational opportunities. If you don’t, it is not too late to set several professional goals, but do it now.

If you are new to IR, consider attending NIRI’s Fundamentals of IR seminar offered in January and September. And every IR professional regardless of tenure should plan on attending the largest IR event in the world, the NIRI Annual Conference in Seattle from June 3-6, 2012. But the NIRI events keep coming to you month after month so your comprehensive development plan can extend throughout the year. Just take a look at our calendar of upcoming seminars and webinars. Remember that NIRI webinars are free to members and only require an hour at your desk. NIRI doesn’t stop here, though, as NIRI chapters have hundreds of great events all year!

NIRI is full of energy and enthusiasm about our profession, and we have the professional development programs to keep you on the cutting edge of IR in 2012. I look forward to seeing each of you at a NIRI program this coming year.

Until next week,

Jeff Morgan, FASAE, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

Just as the SEC prepares to close the books on 2011, so does NIRI. The Commission last week released new mine safety disclosure requirements and amended its rules defining an “accredited investor” near the end of a busy year. Both rules were required by Dodd-Frank, legislation that seems to have driven much of the SEC’s 2011 agenda, along with enforcement. The impact of SEC rulemaking on Investor Relations was minimal this year, and on one hand that is welcome news. On the other hand, fulfilling Dodd-Frank requirements has so consumed the agency that it has had little time to concentrate on areas that companies believe should be reviewed.

The SEC has given indications that 2012 will be more balanced. Yes, it must still fulfill Dodd-Frank mandates, some which will affect the IR community. But I am optimistic that it will (as it has suggested) turn to proxy advisors, 13D reporting and other areas in need of reform.

I believe we are all happy to turn our backs on last year’s market volatility. However, I think the majority of IR professionals see more of the same in the coming year. The European financial crisis and U.S. political climate will likely drive the same type of unsettled market environment for at least part of 2012.

At NIRI, we close 2011 with optimism about our profession. We saw IR professionals more involved with corporate governance, corporate strategy and with competitive analysis among other areas. All of these efforts increased the breadth of value investor relations provides for publicly traded companies.

As an organization, the NIRI Board closed out an 18 month strategic organizational review process that included feedback from about 15 to 20 percent of members – a process resulting in our new OneNIRI strategic vision. I am excited that NIRI will continue to evolve just as the profession evolves, and we look forward to growing with you.

I look forward to presenting at the NIRI Fundamentals of Investor Relations seminar, January 8-11 in Santa Monica, CA. If you have not attended this foundational event, please consider joining your peers. While you’re in Santa Monica, be sure to join two of our popular skills development programs, Writing Workshop for Investor Relations on January 12 and Creating Powerful Investor Presentations on January 13.

As you close out 2011, I wish you all happiness, joy, health and prosperity in the New Year.

Until next week,

Jeff Morgan, FASAE, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

It is holiday time – a time that often involves gift giving. So in the spirit of the season, here is a present that NIRI and others have been working on for you and the broader corporate community:

At the end of this week, NIRI will move offices to Alexandria, Virginia. NIRI will now be much more accessible to Washington and to members who wish to visit. We will be just across the Potomac River from D.C., and also across the street from a subway station. Please make a note of the new address: 225 Reinekers Lane, Suite 560, Alexandria, VA 22314. Our main telephone number will change to 703-562-7700. The new direct numbers for staff can be found on the NIRI website.

A few relevant things that crossed my desk this past week:

First it was the DC Circuit Court’s decision against the SEC on proxy access and its direction to the agency to better prove “economic benefit” in developing new regulations. Second, the federal budget challenges and the SEC’s lack of needed financial resources appear to have impacted the agency’s ability to implement Dodd-Frank, ensure adequate enforcement, and timely perform the other necessary work required in our very dynamic financial system. The third blow came last week in the form of Judge Rakoff of the New York District Court who said that he was unable to rule on the SEC’s $285 million Citigroup settlement on collateralized debt offerings as he didn’t have enough information, and expressed concern that the settlement might not be in the public interest. Bottom line – Judge Rakoff doesn’t like the SEC’s practice of entering into settlements where defendants do not admit or deny accusations, thereby helping them avoid private lawsuits on the same matter.

The SEC is having a challenging time on all fronts – operations, rulemaking and now enforcement is back under the microscope. Following Rakoff’s settlement rejection, SEC Chairman Schapiro immediately asked Congress for help in adopting legislation to increase the penalties the SEC can impose by about nine times their current limits. The SEC troubles are not going away anytime soon and will make for an interesting 2012 as we wait and see the real impact on companies.

Other notable items that crossed my desk last week include:

Today is NIRI’s annual meeting in California where later this evening our Senior Roundtable meeting begins. As part of this process, the board chair position transitions, members elect four new board members and the term of four other board members comes to an end after four years of service. At this meeting, we also review NIRI’s’ finances as of the most recent audit. If you would care to listen to the annual meeting at 3:00 pm ET today, access information is available here.

I want to express my sincere thanks to those members who have completed their service to the organization on the NIRI National Board of Directors. My thanks to Sally Curley, SVP IR at Cardinal Health, Inc.; Don De Laria, Managing Director at LOYAL3 Holdings, Inc.; Carol DiRaimo, VP of IR and Corporate Communications at Jack in the Box, Inc.; and Doug Wilburne, VP IR at Textron Inc. Doug also served as NIRI’s Chairman for this past year.

I would also like to welcome the incoming NIRI Chairman, Derek Cole, VP IR and Corporate Communications at ARCA biopharma, Inc. The four members joining our board today are: Bob Burton, Managing Director at Lambert, Edwards & Associates; Mark Donohue, Sr. Director IR and Corporate Communications at Impax Laboratories, Inc.; David Myers, VP IR at Express Scripts, Inc.; and Deborah Pawlowski, CEO at KEI Advisors. Full bios for our new board members can be found here.

I want to end this week with a quick note that I expect a busy December at the SEC as the agency hustles to release several important new regulations before the end of the year. I expect to see a final rule regarding conflict minerals disclosure and another disclosure rule relating CEO to median employee compensation. The SEC has also given indications it will decide in 2011 whether U.S companies will shift from GAAP to international (IFRS) accounting standards along with a timetable for the change. Watch NIRI’s IR Weekly for updates on these and other IR news over the coming weeks.

Until next week,

Jeff Morgan, FASAE, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

NIRI and IR professionals have long sought reform in institutional ownership transparency including 13F filing secrecy. Warren Buffett is an example of an investor who uses this exemption when accumulating a position. The SEC grants investors, through an application, this special disclosure exemption. NIRI’s position on this matter is outlined in our most recent advocacy position. I think you will agree that our suggested changes are fair and in the spirit of creating market transparency and equality among all investors, issuers and other market participants.

A few other interesting things that crossed my desk last week include:

There has been a cry among some investors, unions and activists about the need for legislative or regulatory action to create more transparency and even shareholder approval on corporate political spending. I have said repeatedly that I cannot see this happening during an election year. However, that doesn't mean it will not appear on your next proxy submitted by shareholders, and in fact I think we will see an increase of this type activity next proxy season. For IR professionals this means being conversant on the matter and understanding how your corporation compares to peers. I found a recent study commissioned by the IRRC Institute titled "Corporate Governance of Political Expenditures: 2011 Benchmark Report on S&P 500 Companies" to be worthwhile, and I encourage you to review it.

Several other interesting items crossed my desk last week including:

Safe harbor warnings are routine for IR professionals, but still a very important part of the legal framework in which we operate. What might happen if the safe harbor warning was missed in advance of a written or oral statement? Coinstar learned the answer in a recent court case. Cooley, LLP offers a good IR practice brief on the subject that I encourage you to read.

Other things that crossed my desk last week include:

I have recently seen several news stories suggesting selective disclosure by a few companies and questioning their Reg FD compliance. Last week I read a speech by the SEC’s Director of Compliance Inspections and Examinations. Though it doesn’t focus solely on publicly-traded companies, the speech does outline the elements of a good compliance and ethics program, and provides an excellent reminder for IR professionals and their companies. Here are several relevant points:

Mixing expert networks and hedge funds is often viewed by IR professionals as a recipe for trouble. SEC Chair, Mary Schapiro, implied the same at a hedge fund conference last week when she said there is a "bright line" between acceptable research and illegal activity. She implied that the SEC will use all of its resources to root out and prosecute any related illegal activity. Ironically, for example, SAC Capital is said to be facing another such SEC probe.

This past week, the Senate filled the two empty SEC commissioner seats by approving the re-appointment of Luis Aguilar and the appointment of Daniel Gallagher. This paves the way for the SEC to move full speed ahead on rule making. Speaking of which, 43 House Democrats urged the Commission to pass rules requiring disclosure of corporate political spending. I believe the possibility that the SEC will pick this up immediately to be remote.

Several other items of note that crossed my desk last week include:

Jobs, jobs, jobs! That seems to be the mantra in Washington as it is for people everywhere. So what is Washington going to do about it? Time will tell, but we can see clues even before Congress considers pieces of President Obama’s jobs bill, and these discussions have the potential to influence IR. For instance, there is a move afoot to pass legislation that would enhance capital access, ultimately promoting more IPOs in the future by helping companies not yet ready for an IPO now. Some of these potential rules include revising SOX compliance thresholds, or permitting private companies to have a larger shareholder base before they are required to go public. There is also talk of freezing or halting new regulations (including possibly Dodd-Frank rules) by federal agencies (like the SEC) that have the potential to slow corporate job growth or negatively affect the economy. I won’t predict what Congress will do, but it will be a fascinating discussion.

Here are a few other things that crossed my desk last week:

During my presentation last week to the NIRI St. Louis Chapter, I received many questions about trading, recent market volatility, the perceived marginalization of investors in favor of traders, and questions about SEC actions around these issues. Issuers and investors alike are frustrated with market volatility, while the SEC wrestles with the many issues under its umbrella. Several solutions (among many) might include increased trading disclosure, greater manipulation-targeted trading analysis, more market transparency and trading limits. The bottom line is the SEC is working on this along with many other issues, including Dodd-Frank implementation. The agency claims that, concerning these challenges, it is overwhelmed and under-resourced. For further insight, I encourage you to read this in-depth Washington Post article on the state of the SEC, and this New York Times piece on global high-frequency trading concerns.

Here are a few other things that crossed my desk this week:

As we begin the fourth quarter and another earnings season looms, I want to give you a brief update on elements of Dodd-Frank implementation I expect in the near term that will be relevant to IR professionals:

This past week, the NIRI Board of Directors made its annual visit to the SEC. Our agenda touched upon many issues including Reg FD, insider trading, expert networks, say-on-pay, Dodd-Frank implementation, proxy mechanics changes, proxy advisors, share ownership transparency, CD&A, MD&A, XBRL, and the upcoming release of NIRI’s updated “Standards of Practice – Disclosure.” I believe the visit was equally helpful for SEC staff to gain the IR perspective, and for our Board to better understand the SEC’s views on many issues critical to IR. It is always refreshing to hear how valuable the SEC considers the IR point of view on these matters.

Here are a few items to share that crossed my desk last week:

This week I am delighted to host our NIRI Chapter Officers’ Fall Leadership Forum here in Alexandria, Virginia. Held annually in conjunction with NIRI’s fall Board of Directors meeting, this gathering is an excellent chance for these two NIRI leadership groups to connect. This year we will have the unique opportunity to engage both groups in a discussion on the outcomes of our Strategic Organization Review – the next step in a process that began last fall. We are fortunate to have members so committed to maintaining NIRI as the preeminent IR professional association, and seeking to improve upon this success. This strategic planning process will form the basis for how we move NIRI forward to better meet member needs over the 2012-2015 time period.

An example of a member need that NIRI consistently addresses is that of raising awareness of the IR profession. One way we do this is through an active media outreach program. I mention this because members sometimes tell me that they are unaware that NIRI is working on their behalf in this way. Please visit the NIRI in the News area of our website to view examples of NIRI placements.

Here are a few relevant news items that crossed my desk last week:

What would you think if I told you that LinkedIn has become a great source of inside intelligence about your company? I am told it is actively being used by expert networks, hedge funds and your competitors to obtain critical information about your organization. A bit scary isn’t it? We generally think of LinkedIn as a professional networking tool and social networking tool for friendly conversation. However, there are many LinkedIn groups that are wide open and have many members, including your organization’s employees. These employees may be giving away information the organization would consider confidential. And these conversations may be used by expert networks as a way to develop these employees as experts to provide even more information. While I think LinkedIn, Facebook, Google+ and other social networks are wonderful tools, you should be sure they are not being used to the detriment of your organization. Make sure your internal disclosure policies and training cover LinkedIn and other social media tools.

Here are a few interesting things that crossed my desk last week:

While most of us enjoyed the final few days of summer with a long Labor Day holiday, politicians found their way back into Washington as their month long summer recess ended. For Americans that means a focus on the deliberations of the 12 member Senate and House deficit cutting super committee. It also likely means much political rhetoric. Facing record low poll ratings, Americans are urging our elected officials in D.C to exercise nonpartisan judgment and good decision making as round two of the deficit cuts begins and continues well into the fall.

Here are a few things that crossed my desk this week:

For many on the East Coast of the United States, last week was marked by non-financial news of a minor earthquake and hurricane. And though all is quiet on the legislative front in Washington as legislators are on recess until after Labor Day, just as the IR profession becomes busier in September, so will Washington.

Here are several news items that crossed my desk this week to share with you:

Financial markets remain very volatile with limited certainty around how long this condition will last. With Congress on recess until early September, one can only guess market reaction once Washington begins discussing solutions to financial pressures on the United States, just as politicians have yet to calm the markets in Europe and elsewhere. Last week, I suggested IR professionals keep on message and continue to tell their story during these times. I also suggest that companies begin to assess the impact of potential federal budget cuts in the coming months as a result of the new congressional deficit-reduction “super committee.” IR should be ready to discuss this impact as investors and potential investors are sure to ask.

Here are several interesting items that crossed my desk last week:

Market volatility reached new extremes last week as we experienced global market moves of positive to negative 5% from one day to the next. Most believe it is very unlikely these market moves were driven by fundamental analysis of companies, but instead by panic, margin calls and computerized trading. For IROs, these are the most challenging market conditions as they lack logic and rational explanation. Time and other actions outside our influence and control will bring markets back into check, as we continue to tell our story to investors.

Some things to share with you this week:

There are some weeks that make you want to put your hands over your eyes and ears and just block out the world. Last week was one, and it unfortunately spilled over into this week. I’m sure at this point we all simply want to block out last week’s U.S. debt deal, the resulting extreme financial market volatility and huge loss, the financial challenges in the eurozone and Friday evening’s S&P U.S. sovereign credit downgrade. It was an ugly week and an even worse Monday.

Here are several positive things to share with you:

Because I’ve received so many emails from members over the past week about proxy access and what happens now, I’d like to share my opinion with you. At this point the courts have stopped the SEC from moving ahead quickly to permit shareholders to nominate directors on company proxy ballots. The SEC would need either the court system to overturn the ruling, or it would need to address the court's concerns and try again. I don't believe that will happen in the near term with the SEC’s Dodd-Frank workload, the black eye the SEC has taken on this matter, and the current political environment.

However, I do see the SEC providing shareholders the ability to place proxy access as a proposal on company proxies, and I think there is a very good chance this will be in place for next year's proxy season. The SEC had suspended its new rules pending the legal challenges, but this was a part of the rules that the recent court decision didn’t address. Questions then involve implementation, whether the SEC will make any changes, and whether this too might be open to legal challenges.

In other news this week:

On Friday the U.S. Court of Appeals overturned the SEC's regulation mandating proxy access which would have given shareholders the right to nominate directors. This new regulation has been tied up in the courts since it was announced last year. In a strongly worded decision the court said, "We agree with the petitioners and hold the Commission acted arbitrarily and capriciously for having failed once again — as it did most recently in American Equity Investment Life Insurance Company v. SEC, 613 F.3d 166, 167–68 (D.C. Cir. 2010), and before that in Chamber of Commerce, 412 F.3d at 136 — adequately to assess the economic effects of a new rule. Here the Commission inconsistently and opportunistically framed the costs and benefits of the rule; failed adequately to quantify the certain costs or to explain why those costs could not be quantified; neglected to support its predictive judgments; contradicted itself; and failed to respond to substantial problems raised by commenters. For these and other reasons, its decision to apply the rule to investment companies was also arbitrary. Because we conclude the Commission failed to justify Rule 14a-11, we need not address the petitioners’ additional argument the Commission arbitrarily rejected proposed alternatives that would have allowed shareholders of each company to decide for that company whether to adopt a mechanism for shareholders’ nominees to get access to proxy materials."

In my opinion, this is a win for companies in that it will allow corporate governance to evolve on a corporation by corporation basis rather than by a mandated "one size fits all" regulatory approach. This decision also serves as a reminder to Congress and the SEC as the agency implements Dodd-Frank legislation at a very fast pace (as mandated by Congress). The SEC must implement new regulation in a manner not driven by arbitrary dates, but with care to ensure proper impact assessments are made.

In other news this week:

The summer earnings season is in full swing in the U.S., but in Washington the heat is coming from the politics involved in raising the federal debt ceiling. I think most Americans find it tiresome, at the very least. While our regulators may be hard at work, it seems far too quiet in D.C. on all other fronts. Let’s turn to a few things that crossed my desk this week:

Last week the SEC held an all day meeting on IFRS readiness in the U.S. leading up to a vote likely in 2012. I heard several common themes:

This past week we saw an anniversary pass without any celebration – the nine year anniversary of Sarbanes-Oxley. This piece of legislation has added significant costs to those companies affected. Many have stated that we will look back in nine years at Dodd-Frank and say the same. One of the first big tests of Dodd-Frank for companies was say-on-pay and say-when-on pay votes. To date less than 40 companies have failed to gain shareholder approval for this advisory vote. Based on all votes cast this year, ISS indicated average support was 91 percent approval by shareholders. But for those companies that had advisory votes on compensation rejected, shareholders have begun to file lawsuits for excessive pay and company waste. The results of these lawsuits will be watched by many. The outcomes of the lawsuits will help to determine the “teeth” that Dodd-Frank may or may not have, as well as another part of the cost impact for Dodd-Frank.

A few other things that crossed my desk that might be of interest:

I invite you to watch a “This Week in the Boardroom” interview from the NIRI Annual Conference with Sally Curley, SVP of Investor Relations at Cardinal Health, Inc. Sally is a NIRI National Board member and also the NIRI 2011 Annual Conference co-chair. She is well positioned to share her views on the state of IR in the boardroom.

If you missed attending or watching the NASDAQ “NIRI Annual Conference Download” last week, replay access is available at the NASDAQ site. Our thanks to NASDAQ for hosting this event.

Last week I was pleased to represent NIRI by speaking on a panel at the annual conference of the Society of Corporate Secretaries and Governance Professionals. It was heartening to hear corporate secretaries talk about the importance of working closely with IR to ensure a successful proxy season and improved shareholder engagement.

I want to make you aware of an updated “NIRI Financial Regulatory Reform Issues” advocacy agenda approved by the NIRI Board during its June meeting. At the top of the list are reforms to ownership position disclosure requirements (13D and 13F rules), shareholder communications systems and proxy advisory services. Concerning 13D and 13F rules, NIRI submitted a letter to the SEC on short sale disclosures this past week recommending broad changes based on NIRI member feedback received from our recent survey on this issue. Thank you to those members that participated in the survey. I encourage you to read the letter – the SEC was very interested in the survey results. NIRI will issue an Executive Alert on the survey results in the near future. Regarding proxy advisors, the SEC confirms that it is likely to propose changes this fall.

IR professionals should be aware of two changes approved by the SEC last week:

NIRI’s annual conference is done for another year, but I believe those who attended found the experience to be valuable on all levels – education, networking and visiting with service providers. Attendance exceeded last year's, and I received very positive feedback. Thanks to all who attended and spoke. Thanks also to our sponsors and service providers - you make the conference the great event that it is! Our next annual conference will be in Seattle, Washington from June 3-6, 2012, so mark your calendars.

Session handouts are available to conference attendees on the NIRI website. For those who did not attend, we appreciate NASDAQ hosting a recap tomorrow morning (Wednesday, June 22 from 8:45-10:00 a.m.). To register for online access or to attend in person, click here.

NYSE’s “This Week in the Boardroom” weekly on-demand webcast program covered the NIRI conference to provide insight for board members and other C-suite executives. This week’s program includes my thoughts from conference as relates to boards of directors. Next week’s program will be an interview with NIRI board member, and conference co-chair, Sally Curley of Cardinal Health, Inc.

I was pleased that several service providers announced new IR product launches at conference. NIRI also issued several press releases, and the first was to announce NIRI’s annual Leadership and Chapter Awards winners. NIRI would not be able to offer all we do for members without our volunteers. Thanks to all those involved, and I am especially proud of all the awards winners! A special thanks to those chapter leaders and NIRI stakeholders who attended the strategy summit on Sunday at conference. We will share the outcomes of that session as the year progresses.

NIRI also announced the launch of a “Global IR Practices Seminar” to be held in Miami, November 16-18, 2011. This new program will educate global members about engaging U.S. investors. The support of sponsors is important to many of our programs, and in this case we recognize and appreciate Ipreo in making this program possible.

NIRI will also host a new “Energy Oil and Gas Symposium” September 14-15, 2011 in Houston, thanks to a partnership with FTI Consulting.

Later this month, we have “Finance Essentials for IR” and “Crisis Communications and Media Management” seminars in New York City. And don’t forget the upcoming University of Michigan “Theory and Practice of IR” week-long certificate program on August 14-19. For our entire upcoming lineup of programs, check our website. Several NIRI chapters also have excellent summer programs, like the Southwest Regional Conference on August 17-19 in San Antonio or the Capital Area Mock Proxy Battle on August 31 in McLean, Virginia.

Until next week,

Jeff Morgan, FASAE, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

The SEC recently asked for public comments on investor education programs (as mandated by Dodd-Frank). NIRI felt it was important to add the IR view and filed this comment letter. I hope you take a moment to read it, as NIRI is your voice in Washington on IR matters.

NIRI members should feel confident that the state of your organization is positive and strong. For an update from NIRI Chairman Doug Wilburne and myself, please check out the NIRI 2010 Annual Report posted this week to our website.

Now on to a few interesting items that crossed my desk last week:

Public companies were largely disappointed last week with the rules related to the SEC’s new whistleblower program that was mandated by Dodd-Frank. An excellent summary fact sheet is included in the press release, and the full 305 page rule is also available. Key takeaways for IR professionals:

Many pre-IPO companies watched from the sidelines last week as LinkedIn launched its IPO at more than double the offering price, quickly landing among the top five all-time first day price gainers. Will this break the logjam for a long list of other social media companies to follow, seeking IR counsel and staffing? I think everyone in the IR profession would appreciate that, and maybe LinkedIn’s lofty 500+ PE ratio will nudge others off the sidelines and into the public company realm.

A few other things from my desk over the past week:

The securities fraud verdict of Galleon’s Raj Rajaratnam was welcome news for most in IR – it reinforces the need for proper legal behavior of corporate insiders and for members of the investment community. Experts are speculating whether this means more hedge funds and expert networks will enter the target zone for SEC enforcement actions, and/or if company insiders, including IR professionals, will be targeted.

I believe this verdict provides an opportunity for everyone to ensure they are operating within an ethical, legally compliant environment. Take a look at this survey executive brief from the Rotterdam School of Management about material information disclosure in one-on-one meetings or this article about concern over one-on-one meetings arranged by investment banks. Companies and investors should use these stories and the Galleon verdict as a reminder of the importance of Reg FD training and compliance.

If you have an ethical dilemma, contact the NIRI Ethics Council to discuss your situation confidentially with this group of respected NIRI members. The Ethics Council is a benefit of your NIRI membership.

Now on to a few other items that crossed my desk last week:

NIRI members have a loud and strong voice when they discuss the need for institutional investor ownership disclosure reform around 13D and 13F reporting requirements. Top among the desired reforms are better enforcement, more frequent reporting (monthly instead of every 45 days), and commensurate long and short position reporting. It is no surprise that these reforms are among NIRI’s priority advocacy issues in Washington. But changes in this area are also some of the most difficult as they would require Congressional action. I believe our efforts have not gone unnoticed considering Dodd-Frank included a mandated study of public short sale disclosure. Last week the SEC requested input on the study that it must submit to Congress this summer. While I encourage every company to comment directly to the SEC, NIRI will also submit a comment letter on behalf of the membership. To assist in our effort to represent the views of all NIRI members, you will receive a survey later this week based upon the pertinent questions by the SEC. Your response will be critical – the more responses received the stronger our voice of reform will be.

Several things crossed my desk over the last week to share with you:

As we turn the calendar to a new month, many members are thinking even further ahead to the summer. Many of you have plans to attend NIRI’s Annual Conference in Orlando from June 12 – 15, and while I have not created an exhaustive list of other IR summer activities, NIRI National offers several summer seminars. Several chapters have summer events and NIRI National serves as host for a week-long immersion course the “Theory and Practice of Investor Relations” at the University of Michigan. So as you begin to plan your summer activities, consider adding one or two IR activities into the mix.

Now onto a few things that crossed my desk this week:

You may have seen the news last week that FASB and IASB agreed to extend the deadline for completing convergence of U.S. and international accounting standards for revenue recognition, financial instruments and leasing from June 30 until the second half of 2011. That effectively pushes a decision on full IFRS convergence until possibly 2012 when the SEC will weigh in on the matter. This becomes very interesting because the composition of the SEC’s Commissioners will be different when the decision is made. Commissioner Casey is leaving soon and many are speculating about her replacement. Commissioner Aguilar has also yet to be re-appointed, and there are also rumors that Chairman Mary Schapiro may leave before the end of 2011! The ramifications extend well beyond IFRS and could affect Dodd-Frank implementation, proxy access, the proxy mechanics review and financial market safeguards. Don’t ever assume anything is a given in Washington.

Now for some things that crossed my desk last week:

For many members this is a busier than normal time spent focused on quarterly earnings, the annual meeting or both. Adding to this, more than a few of you have reached out to me with calls and emails asking about the potential implications of the proposed stock exchange combinations. I believe we all recognize this as another step in the evolution of the exchanges. Preparation is key, but knowing what will actually happen is an exercise in speculation, and that speculation will continue for some time. We heard rumors last week, for example, of special dividends and divestiture of the AMEX stock exchange, as those involved position their proposals to investors and regulators. We also saw this morning’s news of NASDAQ and ICE sweetening their bid for NYSE. The NYSE Euronext annual meeting is on April 28 and is expected to provide further insight into the ultimate outcome.

It was a very quiet week of news crossing my desk. The only item of note was the federal budget approval. This brought increased funding to the SEC, but not the full amount desired to fully implement Dodd-Frank legislation. What will this mean for IR and the SEC’s very full agenda? It means slower implementation of Dodd-Frank, as the SEC has already pushed back some dates. Further delays to yet-unannounced plans on proxy plumbing adjustments and proxy advisor proposals are likely and could extend into 2012, but expect SEC priorities to be centered on those activities perceived to have the highest financial markets impact. Finally, proxy access oral arguments occurred in early April and the case should be decided around midyear. There is a possibility that proxy access will be sent back to the SEC for additional work before implementation, adding more to the Commission’s workload.

Until next week,

Jeff Morgan, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

For most IR professionals, last week’s stories regarding federal budget discussions and the threat of a government shutdown are a bit murky and probably verge on the ridiculous. You may be right, but it isn’t over as we face battles about the federal deficit limit and 2012 budget, and begin to eye the next presidential election. The IR implications relate to federal budget impact on the SEC agenda. We have already seen a slowdown in Dodd-Frank implementation, and expect the same for decisions on increased dark pool trading transparency, proposals on proxy advisor regulation and proxy mechanics. Elsewhere the discussion in financial circles is about exchange consolidation. Both issues are not going away anytime soon and will mean changes for the IR profession.

Now onto a few other items crossing my desk last week:

I am sure you heard the news on Friday of the NASDAQ/ICE bid for the NYSE. NASDAQ CEO Bob Greifeld sent this announcement to issuers discussing the benefits of the proposed deal. As would be expected, NYSE made only an acknowledgement of the offer. It is too early to speculate how this will directly affect issuers. However, NIRI we will be following this closely and will provide you with insight as it plays out in the coming weeks and months.

In other relevant news, NIRI Chairman, Doug Wilburne, was interviewed on TWIB (This Week in the Boardroom) discussing investor relations and its interaction with the boardroom. TWIB’s audience is made up of a large number of board members and C-Suite executives. Doug did a great job of highlighting the profession, so be sure to watch and pass it along to those who might benefit.

Now for a few other items that crossed my desk last week:

For those of you who might (or should) be involved in your organization’s sustainability effort, consider this unique opportunity. As NIRI is to IR, NAEM is to sustainability. With the goal of improving all corporate members’ understanding of sustainability, NIRI has teamed with NAEM to enable NIRI members to attend a one day NAEM symposium at the NAEM member rate. The event will be held on May 4 and is titled, “Measuring Corporate Sustainability: Understanding the Metrics that Matter.” I will be there and hope you will consider it too.

Now for some things that crossed my desk over the last week:

Front and center this week is a joint announcement that NIRI will become a knowledge partner of Corporate Board Member’s “This Week in the Board Room” (TWIB) program. This is recognition of the growing need for a closer board/IR relationship. The TWIB partnership will enable NIRI to highlight some of the outstanding IR corporate practices for board members of all companies, which is particularly important given the growing role of IR and shareholder engagement in corporate governance.

Here are a few related items that crossed my desk last week:

I want to start this week with a note about the earthquake and ensuing tsunami in Japan. Our thoughts, prayers and concerns are with all those affected by this devastating natural disaster.

I have several important things to share with you this week:

As my message arrives in your inbox this week, I am about to attend a NIRI Kansas City chapter event at the KC Federal Reserve. I know other chapters have done similar programs at their regional Federal Reserve and think this is a great opportunity for IR professionals to hear a unique and important perspective on the economy from the folks that manage U.S. monetary policy. My thanks to the Kansas City chapter for coordinating this event and for hosting the spring NIRI National Board meeting.

I attended an SEC meeting last week and experienced firsthand the staff’s questions and concerns about the federal budget and their work plans for 2011. One staffer summed it up by saying the only budget that may not get cut is Enforcement – all other departments may have reductions. I won't argue for the appropriate SEC budget allocation, but I do believe that whatever the outcome, it will have an impact on IR professionals. Like many state legislatures, our federal government is struggling with budgets in the recession aftermath. The political battle over who wins and who loses will likely affect all of us professionally and personally. I will monitor this in the coming weeks, and share my perspective on the effect on the IR profession.

Several noteworthy items that crossed my desk last week include:

IR professionals from around the world converge every June to participate in the NIRI Annual Conference. This event is the largest global gathering of IR professionals, and this year the conference will be held in Orlando, Florida from June 12 to 15. With an extremely strong 2011 program lineup, exhibits are largely sold out and registration is on an excellent pace.

So what is the significance of the number 18? March 18 is the last day to take advantage of the early-bird discount and save $200 on your registration fee. That means you have 18 days left to save. We always see a convergence of IR professionals pushing to register on the last day of the early-bird discount. Don’t wait for March 18 – register today and cross it off your to do list!

Here are a few notable items that crossed my desk last week:

Money and power seem to be themes as we reflect upon events affecting the IR profession over the past week. With a crisis looming, the federal government made little progress in budget discussions. At issue for our profession is SEC funding and the resulting impact on Dodd-Frank rule making. We also witnessed further global exchange consolidation fueled by the fight for power and profits. BATS and Chi-X Europe announced a merger, while rumors swirled around others (NASDAQ, ICE and CME) following the Deustche Boerse / NYSE combination. Driving these deals is trading, competitive pressures and the globalization of financial markets. We will, however, need to wait and watch the effect on corporate issuers. In the end, my hope is that U.S. capital markets will find a way to re-energize and find profitability in the market for smaller IPO’s as well as the largest offerings.

Here are a few noteworthy items that came across my desk last week:

When was the last time you attended a NIRI chapter event? NIRI chapters have completed the first half of the 2010-2011 program year, hosting 173 local events. This impressive number of events is due to the tremendous volunteer efforts of your chapter leaders. Thanks to all chapter leaders, attendees and speakers for making NIRI your home base for IR community.

You had to be living under a rock last week to miss news of the exchange merger talks – NYSE Euronext and Deutsche Boerse; and the London Stock Exchange acquisition of the Toronto Stock Exchange. What does it mean to IR and issuers? I see listing fees becoming an even smaller revenue percentage as exchanges consolidate. Though public company listing revenue may decline relative to other exchange revenue, I still see it as a core and prestigious business.

For a combined entity like NYSE-Deutsche Boerse, I believe trading and new proprietary products will drive revenue growth. Trading will probably be dominated by derivatives – futures and options – with equities in the third spot. The trend of more broker equity order flow internalization continues despite debates about the merits of the practice. I expect more global exchange consolidation in 2011, and I wonder whether it creates opportunity. Will we see new upstart exchanges or others entering and competing? Time will tell, but continually evolving capital markets are the norm for IR professionals.

A few other things that crossed my desk this week:

I am always excited about the NIRI Annual Conference, but the February issue of NIRI’s IR Update almost makes me wish June was already here. Make sure you read the issue when it arrives in your mailbox. Now is a great time to plan for Conference as preregistration rates are still available and hotel room selections are plentiful. This is also an excellent time to consider attending the one-week NIRI/University of Michigan Theory and Practice of Investor Relations program in August. Both events will be here sooner than you expect.

Though the SEC has been very busy so far in 2011, the IR-related activity has been confined to say-on-pay approval. Rest assured, the regulatory wheels are spinning and there is more to come. Here is what you need to know:

Many of you know that I believe IR professionals must become skilled at using social media. While this evokes groans of angst and protests regarding lack of time from some members, I believe it is critical that you are at least monitoring social media channels for information about your company. A recent incident highlights the importance of this awareness. Last week, Microsoft’s earnings release was pre-posted to their website 70 minutes prior to the planned public release time of just after the 4 pm market close. Selerity Inc., a market data firm, found the release and published the information on their website. Microsoft ultimately moved up their public release to a few minutes before the 4 pm close, but traders who saw the news had about an hour to trade on the information before it was publicly available. Selerity makes information like this available as part of their feeds to social media outlets like StockTwits. More information about this instance is available here. Important IR takeaways include:

The breaking news this week is the SEC's approval earlier today of final guidelines for say-on-pay (by a contentious 3 to 2 vote). While the rules are just a few minutes old and the full details have yet to be released, here are a few details I gathered from the meeting:

First up this week are a few important NIRI updates and member requests. While we wait for proposed SEC “say-on-pay” rules to become final (likely very soon), many companies are debating the best shareholder vote frequency (1, 2 or 3 years). There is much discussion on this subject and many requests to NIRI National for insight into member thinking. To help each other and learn where other companies are leaning, please go to the NIRI homepage and indicate your current plans via the NIRI Quick Poll (lower right-hand side).

Many of you are aware that NIRI is in the midst of a “Strategic Organizational Review” to look at whether our organizational structure and member value propositions are still valid after 40+ years, despite all the changes within our capital markets and the technological advances we have experienced. We began this evaluation a few months ago with telephonic focus groups of NIRI chapter presidents. Now it is your turn to add your input and thoughts into the discussion. I ask for your participation in a survey to share your opinions on your NIRI experience on the national and chapter level. The survey is now available online at http://pinnovat.es/nirisurvey -- thank you in advance for taking the time to participate.

Here are two items that crossed my desk this week that you may have missed:

January in Washington began in earnest this past week as a new Congress was sworn in. The impact on the IR profession will most likely be related to any pressure the new Congress exerts on regulatory agendas. Everyone expects Congress to tackle some technical corrections to Dodd-Frank, possibly including modifications to compensation disclosures and whistleblower policies. However, it will be interesting to see if Congress influences the SEC agenda, pushing for or against an examination of capital market structure, for example. I’ll guide you along this journey over the months ahead, but for now, here are a few things of interest this week:

Happy New Year! I hope you are starting the year well rested and ready to conquer whatever 2011 brings. NIRI will be at the ready for you in 2011 – please be sure attending your local NIRI chapter programs is on your “to do” list for the year. Within the next two weeks, NIRI chapters in: D.C., Cleveland/Northern Ohio, St. Louis, Los Angeles, Silicon Valley, Virtual, Central Ohio, Chicago, Kansas City, Rocky Mountain, San Francisco, South Florida, Cincinnati Tri States, Connecticut/Westchester, New York, Arizona, Boston, Houston, Orange County and Triangle are having chapters programs, so there is no need to wait long.

A few things to catch you up as we start the year:

As we bid goodbye to 2010, top news-making memories for the year could include WikiLeaks, the Chilean miners, World Cup soccer, the Gulf oil spill, Lady Gaga and continuing unemployment rates. For IR professionals, the list might also include the May 6 flash crash, new Dodd-Frank regulations, SEC enforcement actions, and an economy that seems to be slowly improving. We all have our own 2010 memories and thoughts of what 2011 may bring. I will leave my 2011 speculations for the January issue of IR Update.

To help as we all focus on a fresh start and personal mountains to climb in 2011, I want to share an article that caused me to look differently at my own goal setting – personal and professional. The article is titled “The Stop-Doing List” and I hope you find it as useful as I did.

Happy New Year and all the best for a healthy and prosperous 2011!

Until next week,

Jeff Morgan, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

Dodd-Frank was back in the news this week as the SEC proposed issuer disclosure rules, mandated by the legislation, on the use of “conflict” minerals – tin, gold, tungsten, tantalum, etc. – from the Congo and neighboring central African countries. Don’t jump to the conclusion that this rule won’t affect your company without reading the proposal. Manufacturing companies using raw materials will naturally be affected, but as currently proposed, so will retailers, “regardless of whether the company has any influence over the manufacturing specifications of the product.” For more information, I suggest reading the SEC overview. Several news clips in the Wall Street Journal and Fox Business might also be helpful. If your company is affected, consider submitting comments to the SEC by the January 31, 2011 deadline. If approved as proposed, it will likely go into effect later in 2011.

A few other items of note this week:

Last week NIRI National held our annual meeting and the membership elected four new board members. NIRI also held our annual Senior Roundtable meeting and those attending this two day event left with insight on a plethora of issues including: evaluating the IR function, IR/board engagement practices, interpreting body language, and the future evolution of IR.

A few of the things that crossed my desk this week included:

I have been asked several times about how the recent elections in Washington might impact the SEC. While no one knows for sure, current wisdom in Washington tells us the SEC and other agencies will be scrutinized to the extent that they burden businesses with new costs and operational challenges as the incoming Congress will be more moderate and focused on job creation. I expect the SEC’s 2011 agenda to primarily be Dodd-Frank implementation, catching up regulation to the evolving capital markets and other outstanding items such as reviewing proxy mechanics for needed improvements. Short of a crisis, I don’t expect much new as the SEC’s plate is already relatively full.

Now for a few things to pass along to you:

Tomorrow marks December’s kickoff as well our NIRI Annual Conference kickoff luncheon in New York City for many exhibitors and sponsors. Would you believe that more than 80% of the booths for our June conference are already taken? Would you believe that a majority of general sessions are already planned? Would you believe that some members have already registered in order to spend 2010 budget dollars? Believe it, and look for some new things this year too - including an international educational track. Conference programming will begin to be posted during the month of December, so consider registering now and follow updates as they are posted.

Some things that crossed my desk this past week to pass along to you:

I’ve begun my last two weekly columns with a reminder to lock down your websites to ensure that, prior to release, your earnings announcements are not discoverable by web crawlers. This past week, NetApp was the latest case – I hope everyone has now gotten the message. I want to thank the Cleveland chapter for their warm hospitality during my visit last week. I enjoyed a well run chapter board meeting, participating in a very engaging discussion on IR and governance, and visiting event host The Sherwin-Williams Company’s museum. For those not familiar with the weekly webcast “This Week in the Boardroom” by Corporate Board Member, I encourage you to check out this useful resource. I was a guest last week in a discussion about evolving trends in IR and the boardroom.

Now on to some things that crossed my desk this week:

Last week I provided a warning about ensuring your yet-to-be-issued earnings releases and other confidential documents are secure on your website. I provided an example from an unnamed company, and this week I want to point to a public example. It appears that companies are being targeted by media outlet web scrapers in advance of public announcements. Once discovered, these news outlets publish the information before companies issue their press releases. The latest example is Disney, where earnings information was covered by news media before the company issued its press release as detailed in this blog. You might argue this is unethical or an invasion of privacy, but IR professionals must ultimately bear the responsibility for ensuring an airtight process including website security. If the news media is doing this, I suspect traders and others are doing the same and will trade on your news in advance of the public announcement.

A couple of other newsworthy items that came across my desk this week:

I recently spoke with a member who told me about a situation where a news organization ran a story on their earnings 45 minutes before the earnings announcement was scheduled for release. The company released their earnings immediately and began an investigation. The company found that the news entity breached an unpublished area of the company’s online newsroom and accessed the confidential draft earnings release by using sophisticated, proprietary web crawlers. The company routinely used this private website area to post and format draft earnings releases prior to publication. Their plan was to do as they had done for many prior quarters and open access to the release once it became public. Unfortunately, the unpublished release was discovered overnight by the media outlet’s proprietary web crawlers. For IR professionals the lesson learned is to be sure your documents are secure on the web wherever they reside. And a word to the wise – the member noted that the news organization pointed out that this type of discovery has happened before.

Some things that might interest you this week:

- NIRI Annual Meeting. The NIRI annual meeting will take place on December 8 and I encourage you to participate in this web cast. Also, please take a minute now to click this link and vote for four new NIRI National board members (under “Online Surveys” heading).

- Overhaul 13D and 13F regulations? NIRI thinks they should be, but the SEC points to Congress as the place to have them changed. That is a tall order, so I am glad to see others expressing concern.

- Short sales trigger delay. Remember those new short sale triggers to halt your stock if the price drops by 10%? The new rules approved in March for implementation on November 10 have been delayed until February 28, 2011.

- Is your board diverse? SEC Commissioner Aguilar discusses why board diversity matters in light of the recent SEC rule requiring companies to disclose how they view board diversity.

- Spokesperson liability and new whistleblower rewards. Concerned about your liability as an official company spokesperson under the new Dodd-Frank whistleblower reward system? Read the SEC’s new whistleblower award proposal.

- Election thoughts and IR impact. Expect Congress to pursue some technical fixes to Dodd-Frank legislation (like CEO compensation disclosures), and apply pressure on the SEC to better balance its three-fold mission of protecting investors, maintaining fair and orderly markets and facilitating capital formation.

Finally this week, it is nice to see IR and NIRI mentioned in a positive story on jobs. Please join a wonderful panel of IR professionals on Thursday for a webinar discussion on Measuring the Success of Your IR Program at 4 pm Eastern.

Until next week,

Jeff Morgan, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

Happy Election Day 2010 and I hope you are planning to vote today! Proxy season is right around the corner and your shareholders will soon be voting too. I hope you have had the chance to check out NIRI’s new Corporate Governance Resource Center. I appreciate your positive feedback concerning this new member benefit. I want to thank our members who have volunteered to be part of the NIRI Peer Governance Network, and I hope you listened to some of these members sharing their expertise last week on a NIRI webinar. Let me share a few things that came across my desk this week that might be of interest to you:

- Empty voting a concern for your organization? The separation of economic and voting rights is of concern to many IR professionals. The Rock Center for Corporate Governance just issued a report on the issue and I suggest you read the Executive Summary, at least, to see their findings.

- FASB announces a delay for companies on new proposed loss contingency provisions. Take a look on the FASB website and an FEI blog for more information. FASB has been fighting concerns from companies as the new standard would require disclosure of prejudicial information.

- FASB asking for IR input. FASB also asked us to pass along to you a request for feedback on the time and effort that will be involved to in adapting to several anticipated new accounting and reporting standards and when those standards should become effective. Comments are due by January 31.

- Stock Buybacks? If your company participates in stock buyback programs, you might want to read this thought piece by Liquidnet who believes a change by the SEC would give you more options and possibly lower buyback costs by modifying Rule 10b-18.

Finally, don’t miss today’s member benefit webinar – Earnings Season – Controlling the Message, and there is still time to register for the November 10 Capital Markets Seminar in San Francisco.

Until next week,

Jeff Morgan, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

One week before midterm elections and the Washington whispers rage. How badly might Democrats lose? Will Republicans be surprised by a strong Democratic turnout? What will happen to Pelosi, Reid and Boehner? Has Obama already thrown in the towel by planning a trip to India and Asia for ten days immediately after the elections? It will all become clearer soon!

The SEC was busy last week – Dodd-Frank implementation and proxy plumbing comments continue. I was pleased to hear SEC Chairman Schapiro speak so strongly about investor communications before a gathering of corporate board members. Schapiro said, “Good communications can build credibility with shareholders and potentially enhance corporate strategies.” NIRI and IR professionals could not agree more! She also outlined the impact of the upcoming proxy mechanics review with the desire to have a more accurate and inclusive voting structure, as well as examine whether OBO/NOBO “erects unnecessary barriers” between companies/boards and shareholders. I hope you read the NIRI comment letter on proxy mechanics outlining a strong desire for fundamental changes. Many others agree with NIRI and I invite you read what your peer companies have written. I also continue to hear that the SEC views this as an important issue and change may begin shortly after the Commission digests comment letters – that means 2011.

I was dismayed to see a press release announcing that the SEC charged Office Depot with violating Reg. FD. I urge you to read the full complaint. The SEC brought enforcement actions against the CEO (who announced his resignation yesterday), and the CFO (who had already left the company). The IR staff at the time is no longer with the company, and the current NIRI member at Office Depot joined the company subsequent to the violation to rebuild the IR program and restore credibility with the Street. According to the compliant, the company had no Reg. FD policies and procedures, nor FD training. The complaint indicates that the IR staff was directed by the CEO and CFO to make private calls to analysts in a way that violated Reg. FD. It goes without saying that it is not acceptable to knowingly carry out a direction that is in violation of a regulation. As NIRI members, you know the importance of a strong IR team that can provide counsel to the C-Suite as well as push back when needed. You are also aware of NIRI’s strict Code of Ethics, as well as NIRI’s Ethics Council made up of senior members available to provide advice and counsel in such situations. After you read the complaint, I suggest you consider passing along the Office Depot case to your management as a reminder of the importance of Reg. FD compliant communications.

Speaking of communications, one standout topic on eGroups this past week was the discussion on the practice of posting earnings call slide decks before the call. Among the discussion participants, it seems the norm is 30-60 minutes before the call, but what I found most interesting were some of the corollary comments made and the nuances between organizations. I appreciate our member who asked the original question, and all those who responded with their process. I am sure many of us are eGroups “lurkers” and read the responses, but I do encourage you to add your input and thoughts, and consider using this forum as a network to reach out to your peers in order to gather instant feedback.

I saw a news story last week that I have to pass along not only because I find it bizarre, but also because it shows how far some might go to ignore investing fundamentals and think they have found a get rich quick scheme. The study correlates the moods of those using Twitter as a predictor of the stock market. Using the “Google-Profile of Mood States” (GPOMS), the study finds accuracy of 87.6% in predicting the daily up and down changes in the closing values of the DJIA in correlation with the “calmness” level as measured by tweets using GPOMS levels. The study used tweets from much of 2008, so if you tweeted in 2008 your tweets were measured for GPOMS levels. Scary stuff, in my opinion!

Finally this week, I want to point out the free member webinar on Thursday introducing NIRI’s new Peer Governance Network.

Until next week,

Jeff Morgan, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

The three month SEC comment period on proxy mechanics changes ends tomorrow. NIRI’s comment letter joins others calling for changes in proxy advisory services, improved ownership transparency and changes to proxy mechanics, including an assurance that fees charged are appropriate. I feel it is important for you to be aware of the fundamental changes that NIRI is advocating, and I hope you will take the time to read this comment letter. NIRI will continue to push for reform in the system. I expect the SEC to consider changes to the system over the next 24 months. All comment letters are available on the SEC website.

In The Buzz section of last week’s IR Weekly, we covered a 60 Minutes report on HFT or high-frequency trading (you should read The Buzz every week!). IR professionals must understand this quickly evolving capital markets topic, and I encourage you spend a few minutes viewing this segment. Market structure is constantly changing and you need to be the subject matter expert on your stock’s market activity. While a 13 minute video won’t make you a capital markets expert, NIRI offers a one day Capital Markets to connect the dots between the market activity and IR practice. The next Capital Markets Seminar is on November 10 in San Francisco.

I want to make you aware of a most interesting study recently published by University of Michigan faculty on the link between 10-K writing quality and the accuracy of earnings forecasts. Among other findings, the authors conclude that “less readable 10-Ks are associated with greater dispersion, lower accuracy, and greater overall uncertainty in analyst earnings forecasts.” One of the authors, Reuven Lehavy, is also a faculty member of the NIRI/University of Michigan summer week long intensive IR certification program, Theory and Practice of Investor Relations.

Please note that as required by Dodd-Frank, the SEC has published proposed rules regarding the new issuer say on pay requirements, as well as investor compensation proxy vote reporting. More information is available in the SEC’s press release. The comment period for these proposals ends November 18.

Last week I mentioned the launch of the NIRI Governance Resource Center. While NIRI has a small staff in Washington, so much of the value of your membership is derived from volunteer involvement. You can see this at the chapter level which is completely operated by volunteers. Concurrent with the new resource center, NIRI launched a new Peer Governance Network of experienced NIRI members that have volunteered to share their governance insight and expertise with other members. This is another program of “members helping members.” On October 28 NIRI will host a member benefit webinar on this new program and hope you will join us. Remember if you miss it live, you can always go back and listen to any NIRI member webinars at a later time.

Finally, speaking of “members helping members” did you read all the thoughtful sharing by NIRI members on eGroups this past week? I found the conversations about reviewing analyst models to be particularly helpful as you compared your own practices with that of others. This type of secure, real-time professional knowledge exchange with thousands of colleagues is invaluable, and I hope you take advantage of this new member benefit!

Until next week,

Jeff Morgan, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

Last week I visited the Connecticut/Westchester chapter and enjoyed good conversation about changes impacting IR. Things seem to change weekly on the new Dodd-Frank legislation, but several NIRI updates before I turn to regulations. First, NIRI members don’t forget to vote your proxy for the new NIRI National Board candidates (under “Online Surveys”). Second, the 2011 Annual Conference Committee is already working on next year’s NIRI Annual Conference and they invite you to submit a session for consideration no later than the deadline of midnight pacific time tomorrow (10/13). By the way, 2011 conference registration will be open soon for the many early birds that want to register with 2010 budget dollars.

As you are likely aware, I have been suggesting that the recent raft of corporate governance changes are an opportunity for IR professionals to add more value in your organization as the importance of investor communications grows in this new environment. Boards of directors need to be much more attuned to the investor mindset, so this should be an area of greater IR concentration. To assist NIRI members, I invite you to check out NIRI’s new Corporate Governance Resource Center. Here you will find specific IR resources, a new Peer Governance Network of NIRI members who stand ready to share their insight with you on a one-on-one basis, and a link to the NIRI Corporate Governance eGroup. I hope you find value in this new NIRI member benefit. Look for a NIRI webinar on this new resource in the next few weeks.

Washington is quiet as politicians are home campaigning, but that hasn’t stopped the Washington rumor mill. One rumor has Vice President Biden stepping aside for Hillary Clinton to become the VP candidate with President Obama in 2012, and setting the stage for a White House run in 2016 (when she will be 69). Other rumors speculate about the lame duck session of Congress after the elections and before the newly elected are seated. Regardless, the post-election period will be interesting and I will expand on that in the coming weeks.

Now to the Dodd-Frank legislative news you need to know:

– In response to the lawsuit filed against the SEC on proxy access, the Commission stayed, or halted, proxy access implementation pending resolution in the U.S. Court of Appeals. This delays proxy access through the spring 2011 proxy season.

– The SEC also announced it would wait until after the spring 2011 proxy season to release a proposal concerning the new requirement to compare CEO and median employee compensation.

– It looks like advisory say-on-pay will be the primary new corporate governance mandate for the 2011 proxy season. We can expect a proposal to be released imminently with a very brief comment period and I would not be surprised if it is sometime this month.

Speaking of the SEC, in The Buzz section of last week’s IR Weekly we covered the new SEC Inspector General’s Report on Section 13(f) reporting requirements. At a minimum you should read the Executive Summary to understand why public companies are so upset with the 13(f) process. I can’t tell you how pleased I was to see this report and feel that NIRI’s comments to the SEC on this subject have been partially heard. At least part of the problem has been identified and will hopefully be addressed. NIRI will continue to push for fixes with 13(f) filings and improvements to ownership transparency.

As I end this week, I want to let you know of an upcoming Capital Markets Seminar in San Francisco on November 10. Those who have attended this program in the past indicate it is well worth the time out of the office to better understand today’s market structure and market participants. I hope you will consider better equipping yourself on today’s capital markets and attending this seminar. Finally, as we approach the October 20 deadline for comment letters to the SEC on proxy mechanics, we are putting the finishing touches on NIRI’s comment letter. I look forward to sharing this with you soon, as well as reading your company’s comment letter on the SEC’s website.

Until next week,

Jeff Morgan, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

This past week I spent time in the San Francisco area speaking to the San Francisco chapter, students from a master’s program in IR at the University of San Francisco and a group of IR professionals with ten-plus years of experience in Silicon Valley. Many of these discussions seemed to have an underlying “disconnect” theme. This theme seemed to even carry through the week’s news. Examples of disconnects from some of my conversations with IR professionals:

- There seems to be a disconnect when companies are pushed for more transparency by investors and legislators, but investors can hide their identity and fight to avoid transparency.

- It seems like a disconnect when the comprehensive practice of IR involves so much more than a narrow stock price focus, but then an out of work analyst is hired solely on the ability to dazzle the CEO with a valuation model and a promise to increase the stock price.

- There seems to be a disconnect when institutional investors separate the investing decision from proxy voting as it is handled by two different areas of the organization.

- The disconnect by institutional investors seems to be magnified when they outsource their vote to a proxy advisor without further involvement.

- The disconnect extends to retail investors that don’t vote their proxy due to confusion, the perception that their vote doesn’t matter or because they assume someone else will vote for them.

- There seems to be a disconnect when long term investors are the stalwarts of our capital markets, yet these markets seem to be controlled by those that use the stock markets with short-term interests in mind.

Disconnects continued in the news:

- The SEC and CFTC released a report on the flash crash of May 6th regarding the brief 600 point fluctuation of the DJIA. The disconnect is that while no one did anything wrong, regulators indicated a fractured set of rules across trading venues and high speed program trading were the likely culprits. Regulators continue to work on changes to the system.

- The BRT (Business Roundtable) and Chamber of Commerce claimed there is a disconnect on the SEC’s new proxy access rules and filed a suit in the D.C. Court of Appeals to stop the SEC action. They claim the SEC:

> Erred in appraising the costs that proxy access would impose on American corporations, shareholders, and workers;

> Ignored evidence and studies highlighting the adverse consequences of proxy access;

> Claimed to be empowering shareholders, but actually restricted shareholders’ ability to prevent special interest shareholders from triggering costly election contests; and

> Claimed to be effectuating state law rights, but gave short shrift to existing state laws regarding access to the proxy and related principles.

Last year the NIRI National Board of Directors began a tradition of meeting with the SEC to discuss IR issues. We continued this tradition on Thursday when your Board, in town for its regular fall meeting, visited with SEC officials regarding the Proxy Mechanics Concept Release. It was gratifying that the SEC welcomed the opportunity to hear the unique investor relations perspective in the investment process. Board members discussed their views, specific examples of issues and potential solutions in areas that included: proxy advisory services, proxy system problems, retail shareholder engagement, shareholder identification and communications. NIRI will now draft and submit comments to the SEC by the October 20, 2010 deadline, and I hope your organization will do the same.

We also hosted the annual NIRI Chapter Leadership Meeting in Washington last week, an opportunity for chapter leaders to visit with the NIRI Board, share ideas with each other, and learn techniques and concepts to improve your chapter experience.

Regarding the NIRI Board meeting, I am pleased to report the election of a new NIRI Board Chair – Doug Wilburne, Vice President, Investor Relations for Textron Inc. Doug will assume office in December at our annual meeting. I find it fitting that Doug will take on this role at such an interesting time for NIRI, just as Textron was involved in the formation of NIRI some 40 years ago.

The NIRI Board also approved an in-depth exploration of our organization in much the same way the SEC is examining the 30-plus year old proxy mechanics. The evaluation will begin this fall with probing questions and discussions and will reach a crescendo at a summit of chapter leaders and other key constituents at our June Annual Conference. Those attending will help chart NIRI’s future. Similar to the changes in our proxy system, much has changed over NIRI’s history not the least of which is the use of technology throughout the organization. I am very excited by this forward thinking endeavor that will ensure NIRI’s continued health through its exceptional value proposition. I applaud your Board for taking this important step and I look forward to providing more information in the next few weeks.

Several other IR-relevant items this week:

- The NYSE’s Commission on Corporate Governance issued a report that includes ten core governance principles. I am particularly pleased the report included one of NIRI’s top advocacy items - shareholder ownership transparency - with this principle: “A critical component of good governance is transparency, as well governed companies should ensure that they have appropriate disclosure policies and practices and investors should also be held to appropriate levels of transparency, including disclosure of derivative or other security ownership on a timely basis.” (emphasis added)

- I also want to make you aware of an SEC Dodd-Frank Resource Center that provides updates and timing of rule-making changes, many of which will impact the practice of investor relations.

NIRI is planning to provide several new resources to help with the growing governance needs of IR practitioners. Look soon for the launch of NIRI’s Peer Governance Network, a group of NIRI members with deep governance experience that have volunteered to answer the governance-related questions of other NIRI members, and to offer their governance expertise. We expect to host a webinar in the near future to introduce this new member benefit. We will also introduce a new page on the NIRI website that aggregates governance resources, as well as a new NIRI Corporate Governance eGroup.

On a related note, we also look forward to introducing a redesigned NIRI eGroups site. This update will make using eGroups more intuitive, and is in keeping with association electronic member forum best practices.

I am traveling this week in the Bay Area meeting with the San Francisco chapter and other senior IR professionals. I look forward to sharing updates on Dodd-Frank and hearing about your IR issues and challenges.

Until next week,

Jeff Morgan, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

Taxes and the Tea Party were the main focus in Washington this past week and the discussions were explosive! As it walked away with several primary victories, many wonder if the Tea Party is helping or hurting the Republican Party. One poll shows 63% voter disapproval rate for Democrats and 73% for Republicans (Obama’s is 47%), so only time will tell. Regardless of your political leaning, everyone seems to have an opinion on extending Bush’s tax cuts. This is likely to be an issue through the election as the tax cuts expire in December, but I doubt there will be action before the elections.

Before I move to IR issues, I’d like thank the Central Ohio, Capital Area, Philadelphia and Virtual chapters for their warmth and hospitality last week as I visited to speak about the IR implications of the Dodd-Frank legislation. I also extend my thanks to the NYSE for hosting New York chapter members and myself to close their market yesterday. If you missed it, here is a link.

Now on to IR news:

- Proxy access rules were finally published in the Federal Register on September 16, so they take effect on November 15, 2010. Proxy access is effective for your company in 2011 based upon you your 2010 proxy mail date.

- The SEC decided last week to consider new rules to require companies to provide targeted disclosures about short-term borrowing. The rule being considered focuses largely on banks, but would require all companies at the end of the quarter to disclose debt levels and average and maximum short-term borrowing. Banks would be required to disclose average borrowing on a daily basis and the maximum during the period. If you are affected by this proposed rule, I suggest reviewing the proposal and commenting directly to the SEC.

- In case you thought the Dodd-Frank bill ended Washington’s preoccupation with corporate compensation, think again. Congressman Barney Frank plans to hold a hearing on Friday about excessive pay practices, especially where it encourages inappropriate risk at financial institutions.

- The Shareholder Forum announced the development of an independent process for companies to verify beneficial stock ownership. The Forum looks to make this online system available to companies in the future.

- The Practising Law Institute devoted one session of last week’s conference to proxy access implementation. Panelists encouraged companies to get know their shareholders, as well as review governance policies and documents now. This is the same message I have been communicating to NIRI members. Proxy access creates a very real opportunity for IR to increase its value within public companies. Session panelists speculated that stock exchanges might modify listing standards in the near future to permit direct engagement between directors and shareholders, so I encourage IR to get involved – you have the most direct connection to shareholders. Your ability to provide a constant flow of communication from shareholders to the company is critical.

- While not new, I want to call your attention to a study by the University of Michigan’s Greg Miller (who is also a lead on the NIRI/University of Michigan IR summer program). The paper is titled “Should Managers Provide Forecasts of Earnings?” and here is a high level overview.

As I come to a close this week, I want to highlight a NIRI member only benefit – NIRI eGroups. This secure NIRI-only discussion community, free from advertising, has become an easy and popular way to share and seek information from your NIRI peers. For instance, I have been fascinated to read all the sharing and speculation on the requests IR departments have received from Moldova for annual reports. eGroups will soon receive a makeover making it even easier to use – look for more information soon.

I look forward to participating this afternoon in a member benefit webinar on the Shareholder Coalition’s views of the SEC’s proxy plumbing concept release. Finally, I call your attention to two upcoming NIRI seminars in Baltimore. The Writing Workshop for Investor Relations will be held on October 7 and Creating Powerful Investor Presentations will be held on October 8. Baltimore is a very accessible city by train or plane, and I look forward to many members participating.

Until next week,

Jeff Morgan, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

Washington spent last week coming back to life after the Labor Day holiday. Much of the political discussion, apart from midterm elections, centered on whom among President Obama’s inner circle may leave after the elections. White House Chief of Staff Rahm Emanuel seemed to be the best bet as he reportedly has his eye on running for mayor of Chicago. While this generated much discussion, the IR-relevant news this week comes in the form of several brief updates.

- The SEC will hold a meeting this Friday to consider whether to require public companies to provide certain disclosures about short-term borrowings (i.e. repurchase agreements). This requirement would likely come in the form of additional guidance in the MD&A related to liquidity and capital resources. I will have more on this next week.

- On Friday the SEC announced it approved new rules to extend the recently adopted circuit breaker program to stocks in the Russell 1000 index and some exchange traded funds. As you may recall, the circuit breaker program temporarily halts a stock when its price fluctuates more than 10% within a five minute period. The SEC also granted approval for cancellation of erroneous trades and pre-entered trades that are priced far from a stock’s current price. These programs were developed as a result of the “flash crash” in May and are in effect on a pilot basis, expiring in December. The SEC is likely to put in place more final (possibly more extensive) rules at that time.

- With a continuing focus on the flash crash, the SEC is now examining practices like “quote stuffing” where a large amount of trade orders are entered in a fraction of second and then canceled almost immediately. SEC Chair Schapiro noted she has some serious concerns about high frequency trading practices. It seems to me the SEC is giving a clear indication that important changes to current trading methods are being considered, and we are likely to see them by the end of the year.

- On the Dodd-Frank legislation front, there is a great deal of conversation (and lobbying) about implementation. Regarding provisions affecting companies, new corporate whistleblower and compensation disclosure rules are generating much concern and attention. You may also be aware that the NYSE submitted a proposal to the SEC to amend NYSE Rule 452 to prohibit the broker vote on matters related to executive compensation. This practice becomes prohibited by Dodd-Frank, so this is part of the process of conforming rules to the new legislation.

- As you are aware proxy access has now become the law, so more are speaking publicly about the implications. Mario Gabelli, for instance, indicated in a CNBC interview (begins around 4 ½ minute mark) that he believes this could become very disruptive for companies as large shareholders nominate directors to keep other investors, who might be more activist, from getting on company boards. That is one investor strategy for protecting the companies they own. I also call your attention to a George Mason University School of Law article that outlines potential novel corporate strategies for defending against shareholder nominated directors. I believe it is important to understand what others may be thinking, so I pass this along and suggest you at least read the summary.

I’ll end by highlighting two disclosure related items. First, an article in Corporate Secretary Magazine discusses a recent change requiring increased disclosure of contingent liabilities. While more disclosure may help investors to better understand the company’s liability, the concern is that it might also invite more lawsuits. The second item is about a disclosure issue being played out in the Supreme Court as outlined in this very brief summary of a medical trade association’s amicus brief. The brief explains that if a particular circuit court ruling stands, medical product firms might become responsible for disclosing every adverse event report about their products, even when it is not material. In other words, companies would be required to become a clearinghouse and have to find and disclose any report (regardless of verifiability or accuracy) about their products. While this is only focused in the medical products area, you can imagine how alarming this logic is and what would happen if this became an expectation for all companies.

Until next week,

Jeff Morgan, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

Labor Day marks the end of summer and for most of us it means an increased work pace as year-end comes into view. Congressmen also return this week with their sights on fall elections. Over the summer recess congressional observers have noticed subtle changes. A Gallup poll last week, for example, found that Republicans have a 10 point edge in congressional elections. That size lead seems unfathomable and has some Democratic strategists already privately projecting the loss of the House Democratic majority, causing endangered Democrats to distance themselves from Nancy Pelosi. While typical of Washington politics, it is very early for anyone to consider any fall vote to be a sure thing.

Before I turn to the final installment of my SEC proxy plumbing concept release summary, let me give you some NIRI news. To kick off NIRI’s fall education programming, I look forward to moderating a webinar tomorrow on the key governance provisions from Dodd-Frank affecting IR professionals. NIRI offers a wealth of education programs this fall available either in-person or as webinars. You may recall seeing a mailing of some of these programs, or you can check out the schedule on the NIRI website for in-person seminars or online webinars. And, if you're in the New York City area, we hope you can join the Finance Essentials for IR two-day interactive seminar instructed by Miranda Lane of FinanceTalking. Miranda is a world-class instructor and one of the highest rated NIRI speakers. This is a great opportunity to take a deep dive into the finance skills needed to tell your company's story.

As you know, I have been “beating the drum” over the past months about the role of investor relations as a conduit of two way information between investors, the C-Suite and the Board regarding governance issues affecting your organization. I am honored to have been named to the National Association of Corporate Directors (NACD) list of the NACD Directorship 100 most influential people in America on corporate governance matters for 2010. This is a wonderful recognition of IR’s growing importance in corporate governance issues, and is great recognition NIRI’s value.

Let’s now turn our focus to the SEC’s proxy plumbing concept release.

Proxy Concept Release – Proxy Advisory Firms (pp. 105-126)

Over the last twenty-five years institutional investors have substantially increased their use of proxy advisory firms to assist with, among other things, analysis of and recommendations for voting on matters presented for a shareholder vote. Some proxy advisory firms also provide consulting services to issuers on corporate governance or executive compensation matters, and as a result, provide vote recommendations to institutional investors on matters for which they also provide consulting services to the issuer. The SEC explores this and other issues related to the growing influence of this unregulated industry. A sampling of the questions the SEC asks includes: Do proxy advisory firms control or significantly influence shareholder voting without appropriate oversight? Are there conflicts of interest when a proxy advisory firm provides services to both investors, including shareholder proponents, and issuers? Are existing procedures followed by proxy advisory firms sufficient to ensure that proxy research reports provided to investor clients are materially accurate and complete? Would requiring public disclosure of voting recommendations be an appropriate means to promote accurate voting recommendations?

Proxy Concept Release ¬– Dual Record Date (pp. 127-137)

The SEC examines recent changes in state law that allows companies to use separate record dates – notice record date and voting record date. While this is generally not the focus of IR professionals, the SEC questions the implications of this change.

Proxy Concept Release – Empty Voting and Related Decoupling Issues (pp. 137-151)

In the final section, the SEC explores ways to improve ownership transparency as related specifically to empty voting and the separation of voting and economic interest. Questions include: If the SEC were to propose any enhanced or new disclosure requirements, what should the filing deadlines be under various circumstances in order to inform the marketplace on a timely basis? What should be the triggers for such disclosure requirements? For instance, in establishing such a trigger, is the more than 5% equity ownership threshold of Exchange Act Section 13(d) analogous in any way? Are the current “beneficial owner” concepts contemplated by Regulation 13D-G, some variation of such concepts, or some altogether different concept of ownership appropriate for determining whether a disclosure requirement is triggered? Or should decoupling-related disclosures not be based on conceptions of ownership, but instead be based on the nature of the investor and presence of investment discretion, as with Form 13F?

With this last installment, we have reached page 151 of the proxy concept release. I hope you feel more comfortable about the contents of the release. I certainly hope your company will submit a comment letter to the SEC by the mid-October deadline. Opportunity for positive change exists for issuers – but only if issuers comment on the changes they desire. Please encourage your organization to voice an opinion.

Until next week,

Jeff Morgan, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

As the summer congressional recess continues, eyes in Washington looked west this past week. The trial verdict announcement and news of the likely retrial of ex-governor of Illinois Blagojevich seemed to generate the most discussion around Washington. That was until the SEC announced August 25 (tomorrow) as the date for a final ruling on proxy access (expect a 3-2 vote). Will rumors of a required two year, 3% ownership threshold for shareholder nominated directors hold true? Institutional investors are pushing for lower thresholds, while corporations are pushing for higher thresholds (5% on individuals and 10% on groups). I will attend the meeting and will report to you next week. This Race to the Bottom blog post provides an excellent summary of why many companies are fearful about the unintended consequences of proxy access.

This week I return to the SEC’s proxy concept release and focus on facilitating retail investor participation and data-tagging.

Proxy Concept Release – Facilitating Retail Participation (pp. 78-96)

In this section, the SEC seeks to promote and facilitate shareholder voting in general, and in particular, voices its concern about the significant lack of participation by retail investors in proxy voting. A sampling of the questions include: Should issuers or brokers enhance their Web sites to provide the issuers’ shareholders or the brokers’ customers, respectively, with the ability to receive notices of upcoming corporate votes, to access proxy materials and to vote shares through their personal account pages? Should the SEC encourage the creation of inexpensive or free proxy voting platforms that would provide retail investors with access to proxy research, vote recommendations and vote execution? If so, how? Should the SEC consider requiring that companies using a “notice and access” model for distributing proxy materials be required to use that model on a stratified basis to encourage retail voting participation? Should the SEC regulate fees charged by notice and access providers?

Proxy Concept Release – Data-Tagging Proxy Materials (pp. 96-104)

In this section the SEC examines whether data-tagging the proxy in an XBRL style manner might enhance the level and quality of shareholder participation in the process. Questions include: Should the SEC require issuers to provide proxy statement and voting information in an interactive data format? Should executive compensation information be data tagged?

Last week NIRI issued an Executive Alert on the Proxy Concept paper. The NIRI National Board and I really want your insight and contributions as we prepare for a meeting with the SEC and related comment letter. Your help in the form of thoughts and examples would be greatly appreciated.

In NIRI news, I attended the revamped NIRI/University of Michigan Investor Relations certificate program last week. The changes made in the program this year were terrific. Included were new topics like “cross cultural aspects of dealing in global capital markets,” “persuasive communications” and “effective disclosure research.” While next summer seems a long way off, 2011 budget planning is just around the corner and I encourage you to consider adding this program to your budget.

For those new to IR - less than five years experience – it isn’t too late to attend NIRI’s Introduction to Investor Relations September 12-15 in Boston. Finance Essentials for IR is also open for registration and will be held September 16-17 in New York City. Seats are limited, so do not delay in registering. This recently launched program is recommended for anyone seeking the key financial tools to engage finance professionals ranging from the CFO to the buy- and sell-side and financial media.

Until next week,

Jeff Morgan, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

The August recess is welcomed by our elected officials in Congress. They will likely take some vacation through Labor Day, spending time in their home districts and getting caught up in fall election campaigning. For the rest of us in Washington, this is also a time to try to catch up before the fall legislative session begins. There is no rest for the SEC, however, as the clock ticks on Dodd-Frank items to complete before various deadlines.

The NYSE recently sent a notice to its listed companies and member organizations (as required by Dodd-Frank) that it will file an amendment to NYSE Rule 452 relating to executive compensation. For proxy statements that include executive compensation proposals for which member organizations had previously been allowed to vote uninstructed shares, the NYSE will treat these matters as "May Not Vote" rulings effective immediately. NASDAQ will do the same.

Tomorrow night I will moderate a Dodd-Frank program for the NIRI NY chapter that will include panelists from NYSE, NASDAQ and others. I also continue to await the SEC final proxy access rules, and as I have stated, I expect this to occur before Labor Day and likely the last week of August – some say it may be August 25.

Now, let’s continue our examination of the SEC’s proxy mechanics concept release and how your company might participate in the process by offering comments to the SEC. Last week, I highlighted over-voting and under-voting, as well as issues related to proxy voting confirmation. This week we look at several additional proxy matters in this lengthy message.

Proxy Concept Release – Proxy Voting by Institutional Securities Lenders (pp. 43-47)

In stock lending situations, current rules transfer voting privileges from the lender to the borrower of shares. This creates proxy solicitation uncertainty for companies and IR professionals, especially related to large institutional holders with stock lending programs. The SEC seeks opinions on this and, in particular, whether providing increased information to institutional shareholders would help them determine if they should recall lent stock in order to vote. Questions asked by the SEC in this area include: Should the Commission propose a rule requiring issuers to disclose the meeting agenda sufficiently in advance of the record date to permit securities lenders to determine if the matters warrant a loan termination so they may vote? Would the issuer know, sufficiently in advance, all of the agenda items, particularly shareholder proposals which may become the subject of a request for no-action relief? Could the SEC address concerns by allowing issuers to publish an agenda that is subject to change? How often does uncertainty about a meeting agenda preclude issuers from disclosing the agenda in sufficient time for shareholders to recall loans before the record date? Should issuers be required to issue a press release or make a company Web site posting in addition to filing a notice with the Commission?

Proxy Concept Release – Disclosure of Voting by Funds (pp. 47-49)

Management investment companies are currently required to disclose on Form N-PX how they vote proxies related to their portfolio securities. However, there is no requirement to disclose the number of shares for which proxies were voted or any stock lending information. Questions asked by the SEC in this area include: Should Form N-PX require disclosure of the actual number of shares voted? Should Form N-PX require disclosure of the number of portfolio securities for which a fund did not vote because the securities were on loan or for other reasons?

Proxy Concept Release – Proxy Distribution Fees (pp. 50-63)

Most IR professionals are aware of the costs associated with proxy distribution, including the “notice and access” method. While proxy fees are set by the NYSE, notice and access fees have no similar mandated fees. The SEC notes issuers have raised concerns over the reasonableness of these fees, as well as concerns about the OBO/NOBO system. The SEC also states that “market forces should ultimately determine competitive and reasonable rates,” and suggests “a process that fosters competition could give issuers, which are responsible for reimbursing only reasonable proxy distribution costs, more control over that process and remove the Commission and SROs from the business of setting rates.” However, the SEC understands that lack of a competitive market requires regulated fees.

NIRI, as a member of the Shareholder Communications Coalition, has suggested the alternative of creating a utility function to aggregate beneficial owner information data, and then permit service providers to compete for proxy materials distribution. As the concept paper states, “This would also place the choice of proxy service provider in the hands of the entity that must pay for the distribution—the issuer—rather than the securities intermediary, which has no incentive to reduce costs.” We understand that managing these costs is one of the highest priority proxy items for issuers and we believe the Coalition solution has a high likelihood of meeting issuer’s needs. Therefore, we urge issuers to write to the SEC with their specific thoughts and opinions on this subject, as well as any details of perceived inequities in fees.

Questions asked by the SEC in this section include: Does the current fee structure discourage issuers from communicating with beneficial owners beyond delivery of the required proxy materials? Should there be an independent third-party audit of the current fee structure? Should the current fee structure that is set forth in SRO rules be revised to include fees for notice and access delivery? If so, what fees for the notice and access model might constitute “reasonable reimbursement?” Does the current proxy distribution system – in which the proxy service provider is selected by a broker-dealer but paid by the issuer – create a lack of incentives to reduce costs? Should the issuer have more control over the selection and payment of the proxy service provider, and if so, what alternatives to the current system would facilitate this? What are the potential benefits and drawbacks of such alternatives? What factors are currently affecting the level of competition in the market for proxy service providers and their fees? What principles should guide the Commission’s current consideration of competition among proxy service providers? If issuers were able to solicit proxies directly from beneficial owners, what effect would that likely have on proxy distribution costs? What are the potential merits and drawbacks of having a central data aggregator collect beneficial owner information from securities intermediaries? Would changes to the OBO/NOBO mechanism, or the creation of a central data aggregator, encourage competition in the proxy distribution sector?

I urge you and your company to review these items, and share your views and company-specific instances of problems with the SEC. Next week I will review the Communications and Shareholder Participation section.

NIRI’s highly-rated Introduction to Investor Relations takes place September 12-15 in Boston – an excellent place for IR career development. And if you have a full week to devote to IR education, the University of Michigan IR Certificate program, Theory and Practice of Investor Relations takes place August 15-20.

Until next week,

Jeff Morgan, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

The heat wave on the East Coast has kept many of us looking for ways to stay cool. However, in Washington, the “hot air” became even hotter as news of the Shirley Sherrod mistake and Charlie Rangel’s ethics problems seemed to overshadow President Obama’s signing of the landmark Dodd-Frank Wall Street Reform and Consumer Protection Act on Wednesday. Many on Wall Street who are directly affected by the legislation were, in an uncustomary manner, not invited to the signing ceremony. Regardless, things now become really interesting.

The SEC must hire approximately 800 additional staff in order to handle new responsibilities, issue more than 200 new rules and complete almost 20 studies in a relatively short time period. Some of these new regulations will affect IR professionals as we outlined in NIRI’s most recent Executive Alert on the impact of financial reform. I don’t expect the SEC to wait long – I am already hearing that by as early as next month we may see a final proxy access rule for shareholder nominated directors. Because Congress is on recess most of the month until after Labor Day, August is generally quiet in Washington, but the SEC will be buzzing.

One aspect of financial reform that I mentioned during the House and Senate negotiations was the potential for increased short sale disclosure. Indeed, Section 929 of the new legislation is an amendment to Section 13(f) disclosures requiring “public disclosure of the name of the issuer and the title, class, CUSIP number and aggregate amount of the number of short sales of each security, and any additional information determined by the Commission following the end of the reporting period. At a minimum, such public disclosure shall occur every month.” The legislation also further outlines manipulative short selling as illegal and adds some clarity for brokers to notify customers “that they may elect not to allow their fully paid securities to be used in connection with short sales. If a broker or dealer uses a customer’s securities in connection with short sales, the broker or dealer shall provide notice to its customer that the broker or dealer may receive compensation in connection with lending the customer’s securities.” So does this mean issuers may gain further insight into shareholder ownership with improved 13(f) filings that include short sale activities? I would like to think so, and NIRI will certainly be working towards this end as the SEC implements this rule. I suggest reading a recent article in Securities Technology Monitor for further discussion of this provision if you are interested in more information.

Last week, I told you about the very important solicitation for comment by the SEC on proxy mechanics. Starting next week and extending for several weeks, I will be taking the SEC’s concept release apart section by section and urging you and your companies to comment on what I believe to be those areas most critical to our profession. The participation of public companies in the SEC comment process is absolutely essential to improving the U.S. proxy system.

In NIRI news this week, I invite both attendees and non-attendees to access session materials, video and audio from the 2010 NIRI Annual Conference available on the NIRI website. An excellent example of the kind of high-impact, immediately actionable content presented at conference are the top career management tips provided by the panel of NIRI member experts assembled for our popular “Advancing from Mid-Career to the Next Level” session.

I also invite you to attend our free member webinar “Issues and Trends in IR Communication” with participation from NIRI Senior Roundtable members and NIRI’s research department. Next week we begin the three part webinar “Creating Compelling Investor Presentations” for the member price of $150 for all three parts. Finally, NIRI will participate in an industry effort coordinated by the CFA Institute to suggest a model Compensation Discussion and Analysis or CD&A for issuers to adopt. I am looking for reviewers to read the proposal and provide comments. If you are interested, please email me. Thank you in advance for your consideration.

Until next week,

Jeff Morgan, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

It appears to have been a week of nearly unprecedented significance for the SEC: a landmark $550 million settlement with Goldman Sachs - the largest SEC penalty ever assessed against any Wall Street firm; congressional passage of the mammoth “Dodd-Frank Wall Street Reform and Consumer Protection Act” replete with its major rulemaking implications; and the long-awaited issuance of its 151 page “Concept Release on the U.S. Proxy System.” And while the first item is simply interesting, regular readers know that it is the second and third items that have important implications for NIRI members and their companies.

In what is being described as the greatest legislative change to financial supervision since the 1930’s, the Dodd-Frank Act will affect all U.S. public companies. Passed by the Senate last week, it is currently on President Obama’s desk awaiting his signature. The White House has announced that the president will sign it into law tomorrow, and NIRI will release an Executive Alert later today outlining investor relations considerations. The regulatory implications are significant – I have seen reports that the bill requires nearly 250 rulemakings and nearly 70 studies. To give you a perspective on its size, the Dodd-Frank Act is 2,319 pages, while Sarbanes-Oxley legislation was only 61 pages. The SEC gets its fair share of studies and new rulemaking from the new legislation, particularly as it relates to public company corporate governance. So now the hard work of regulatory implementation begins and we must wait and watch. The legislation sets up a defined timeline for some items, but in many cases it is left up to the rulemaker such as the SEC.

Despite this significant new workload, the SEC to its credit pushed forward last week with its “proxy plumbing” concept release. NIRI responded by issuing a press release supporting this effort. As you know, on its own and through the Shareholder Communications Coalition, NIRI has long advocated for improvements to the proxy system and related issues including greater proxy advisory service regulatory oversight and transparency and a stronger institutional share ownership disclosure regime. I think any improvements can only serve to increase public confidence in the integrity of our markets. The key will be for public companies to take advantage of the SEC’s 90 day comment period to submit specific problems they have had with proxy mechanics and suggest improvements.

While this action was unfolding in Washington, I was in São Paulo, Brazil for the week as a guest of IBRI (the Brazilian equivalent to NIRI) speaking at their annual conference. Other than our neighbor Canada, Brazil has the largest number of non-U.S. NIRI members. They also have the second largest non-U.S. NIRI conference attendance. I was delighted to have the opportunity to spend time there and want to share several observations with you.

I believe Brazil has about 400 public companies, yet there were 800 people attending the conference! Brazilian public companies are required by law to have someone in an investor relations capacity and so they take IR very seriously. So seriously, in fact, that many send the entire IR team including the CFO to the conference. Plus, Brazil’s SEC equivalent, the CVM, is an active participant in the conference and sat through sessions to hear about problems and challenges of IR professionals. Lastly, they invite the analyst association – ABRASCA – to be active partners in the conference making for a very positive experience.

One thing Brazilian IR professionals don’t have to worry about is shareholder ID and a detailed understanding of who owns their shares. Trade data (as I understand it) is reported daily to the CVM so companies have a continuous shareholder base update. Those with U.S. ADR’s are understandably as frustrated as American companies with the lack of U.S. ownership transparency. Needless to say, I was impressed and it reaffirmed for me how much we can all learn from each other.

Finally this week, let me remind you about our upcoming “Introduction to Investor Relations” on September 12-15 in Boston. NIRI offers this comprehensive program twice a year and it is an excellent place to begin your career development in the field of investor relations. Alternatively, if you have a full week to devote to IR professional development, registration ends shortly for the University of Michigan IR Certificate program, “Theory and Practice of Investor Relations” on August 15-20.

Until next week,

Jeff Morgan, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

Congress returned to Washington yesterday with a full agenda including the financial regulatory reform legislation that most expect to pass the Senate in the next two weeks and be immediately signed into law by the president. SEC Chair Mary Schapiro spoke about this issue last week at a conference of the Society of Corporate Secretaries and Governance Professionals. I attended the conference and spoke on the benefits of IR and corporate secretaries working together more closely, and I also visited with several NIRI members.

In her speech, Schapiro discussed the expected workload at the SEC as a result of the reform legislation noting that the amount of studies and increased authority will create an environment where a great deal must be done in a relatively short time over the next 18 months. Top of mind considerations for Schapiro, in addition to implementing governance provisions, include: increased SEC oversight of OTC derivatives, implementing standards of care for broker/dealers and investment advisors, harmonizing fiduciary standards for anyone giving investment advice, and hedge fund oversight.

The SEC is not, however, waiting to issue a concept release on voting infrastructure, or proxy mechanics. One of NIRI’s top advocacy agenda priorities, NIRI has been pushing for change on this for quite a while. Approval of the concept release is expected tomorrow at an open SEC meeting. The release will be divided into three sections, with specific questions/issues contained in each section. The first section is likely to address accuracy, transparency, and efficiency in the voting process, and will touch on issues such as: over-voting and under-voting, vote confirmation, voting and securities lending, proxy distribution costs including e-Proxy fees and client-directed voting.

The second section is expected to consider shareholder communications and participation, including: the NOBO/OBO classification system, the need to increase retail investor participation in proxy voting, investor education, shareholder forums, whether e-Proxy has been successful, and the feasibility of data tagging proxy and vote filings.

I believe the third section will explore the relationship between voting power and economic interest of shares, and discuss proxy advisory services oversight, record date issues (dual record date feasibility) and empty voting.

The SEC is expected to put the concept release out for a 90 day comment period. The Commission emphasizes the need for individual companies to submit comments citing specific inequities and problems they have encountered. The SEC is interested in addressing areas of the proxy system where current structure disadvantages segments of shareholders. We will be going into more depth on this once the concept paper is approved and available for reading.

Speaking of reading, I invite you to read a ProPublica article highlighting new academic research suggesting that hedge funds may be trading on insider information supplied by companies that seek loans from them. I am not sure how widespread the practice of borrowing from hedge funds actually is, but it seems problematic and much like letting the fox inside the henhouse.

I am nearing my limit for this week’s message and want to end on the lighter side. Since you might start hearing a recently coined Washington phrase – the “G factor” – in the near future, I’ll give you a little background so you can be one of the first to use it in your organization. The “G factor” is the convergence of all things starting with “G” that are casting a cloud over the Obama administration, the economy and our general well being. The list includes: Gulf oil spill, Greece’s economy, Gaza/the Middle East, Germany and the financial stability actions of Europe, probably guns for Afghanistan/Iraq and, finally, GDP for the concerns of our slowing economy.

Until next week,

Jeff Morgan, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

We crossed the midway line this past week for 2010. While we wait for the Senate to pass financial regulatory reform and the President to sign the reform into law, it seems like a good time to catch our breath after the long weekend. Let's look at Washington and regulatory changes affecting IR during the last six months and then look ahead to the rest of 2010 and potential regulatory changes that may impact IR.

During the first half of 2010:

• The SEC approved some long awaited Notice & Access changes.
•The SEC released an updated climate change disclosure interpretation.
•The SEC approved a modified circuit breaker/uptick rule.
•The SEC implemented additional circuit breakers after the flash crash.
•The SEC approved an IFRS work plan.
•The SEC issued a concept release on evolving capital markets.
•Congress almost approves regulatory reform legislation with many governance and disclosure changes.

Looking forward over the next six months, here are my thoughts on several items affecting IR that will (or are likely to) take place on the regulatory scene here in Washington:

• In mid-July, Congress is likely to finally approve financial regulatory reform legislation with many governance and disclosure changes included as part of the legislation. NIRI will issue an Executive Alert on these changes as soon as President Obama signs this into law. In some companies, new regulations could have a significant impact on corporate governance. IR should stand ready for increased involvement with C-Suite and Board.

• Within a few weeks of the President signing into law financial regulatory reform, the SEC will likely approve proxy access rules and companies will immediately begin to assess the impact of shareholder access to Board nominations. IR professionals should be an important internal voice in determining corporate strategies on proxy access.

• The SEC will release and then quickly approve new rules for companies to comply with new federal say-on-pay laws and compensation disclosure laws as mandated by new financial reform laws. IR professionals will want to get up to speed on these quickly and NIRI will be working to ensure that IROs understand the impact.

•Before the end of summer, the SEC is expected to release a concept paper on evaluating proxy mechanics, improvements to shareholder communications and an evaluation of proxy advisory firms. NIRI and our partners, via the Shareholder Communications Coalition, will be asking for companies to write comment letters, and NIRI's Board will be meeting with the SEC on this matter in September.

•Over the next few months the Senate may take the House's lead and consider new laws that would require disclosure of political contributions. NIRI will follow this issue and report back to you as this matter evolves.

•On November 2, 2010, citizens of the U.S. will vote on 36 of 100 Senate seats and all 435 Congressional seats. The election season is likely to be especially difficult for incumbents of both parties and the election outcome will likely impact the President's agenda for his next two years in office. Democrats and Republicans alike will be jockeying for position over the next few months, so it is not unlikely to expect some surprises in Washington. Who knows what or how this will affect IR, but NIRI will be monitoring this closely.

•FASB's work and IFRS convergence projects, including those on financial instruments, revenue recognition, leases, presentation of other comprehensive income, fair value, financial statement presentation and consolidations, to name a few, will require IR to understand any changes that take place. IR will then need to work with financial staff to understand the impact within the company, in financial presentations and in investor's understanding of the organization. NIRI will supply resources to IR professionals as these changes materialize.

In conclusion, while I won't make any wild speculations, it wouldn't surprise me to see some minor changes in the proxy system considered by year end, new models emerge for proxy advisory services, and for the SEC to consider the issue of majority voting. I hope you have planned some vacation for the summer, because I think we are all going to need that time to re-energize and prepare for a busy fall. In my opinion, it will not be a quiet second half of the year and I believe IR professionals and those who oversee IR will want to stay close to NIRI to be sure to stay abreast of changes.

Until next week,

Jeff Morgan, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

As Washington and particularly Congress focuses on the July 4th holiday break, there is still much to do. It will be an interesting vote this week (if it happens) on final financial reform legislation as the debate in the joint House-Senate Conference Committee ended late last week with agreement on a 2,000+ page final bill. Doubt has crept into every step of the financial regulatory reform bill process and the last hurdle (final passage by House and Senate) has everyone holding their breath. In fact, Senator Byrd’s death yesterday creates just another challenge in getting the votes needed for passage. I have not yet read the entire bill, but the following highlights the governance and other provisions of interest to IR:

• Federally mandated majority voting has been removed.
• Federally mandated shareholder proxy access was a hotly debated area. Congress will not mandate shareholder holding requirements, instead giving the SEC authority to implement proxy access. We should expect the SEC to pass a final rule as early as July, but certainly before the end of summer.
• Federally mandated non-binding say-on-pay – shareholders will have the decision on the frequency of this vote (every one, two or three years). The SEC will also have the authority to exempt smaller companies.
• Shareholder vote on golden parachutes is included.
• Mandated executive compensation clawbacks for inaccurate financial statements is included.
• Corporate compensation committees will be required to include only independent directors and have authority to hire compensation consultants.
• SOX exemption for small businesses with less than $75 million in market capitalization is included.
• The SEC will require companies to disclose the comparison of: 1) executive compensation to financial performance, and 2) CEO compensation to the median compensation of all other employees.
• Enhanced compensation rules are included for the financial services sector.
• Disclosure of employee and director hedging.
• Large institutional money managers will be required to disclose their compensation-related votes.
• Hedge funds must register and provide additional information to the SEC.

The last word on financial regulatory reform for this week is that many in the House and Senate are cranky about parts of the bill which has resulted in a great deal of tension related to securing the necessary votes for passage. Since they believe passage is a done deal, lobbyists for the many interests represented by the new provisions have moved on to the regulators charged with implementing the new regulations.

While the SEC appears to have missed their stated June 30th deadline for the proxy plumbing concept release, I am hopeful it will be released in July. Your NIRI National Board will meet with the SEC on this matter in September. SEC Chairman Schapiro recently discussed some of the questions that will be in the release related to proxy advisory firms, including (my personal thoughts in parentheses):

• Should there be greater oversight on proxy advisory firms by the Commission? (Yes!)
• Should there be checks on accuracy of the information provided by proxy advisers? (Yes!)
• Do advisers that provide services to corporations and investors manage their conflicts of interests appropriately? (It seems like a conflict when to advise investors on an issue and also evaluate companies on the same matter.)

The Securities Transfer Association (STA) sent a letter to the SEC in early June requesting a review of proxy communications fees. They are particularly focused on the appropriateness of suppression and other fees being charged for investors in separately managed accounts. For example, STA believes fees should not be charged when an investor has delegated proxy voting rights to a broker-dealer. Thanks to the STA for bringing up this matter. It seems to me that this is an area where fees should certainly be reviewed.

Now NIRI news for this week:
1. Tomorrow is “Downloading NIRI,” our review of the 2010 NIRI Annual Conference broadcast from the NASDAQ MarketSite. Attend in person, online or view the video after the event. More information is available on the NIRI website.
2. Individual annual conference sessions are now available online. These sessions enable you to benefit from the great programming if you were unable to attend. More information is available here.
3. NIRI’s 2009 Annual Report is now available online here.
4. Now that we have ushered in summer, the NIRI – University of Michigan IR Certificate Program is just around the corner in August. The curriculum has undergone a complete review and update to keep pace with the changing role of IR in today’s capital markets. This certificate program is one of only two such programs NIRI supports at a national level, and is a great way to gain a career edge. For more information, click here. I look forward to seeing you in mid-August at the University of Michigan.
5. Finally, our sympathies to the family of Tom Newton who passed away over the weekend. Tom is formerly with Computershare.

Until next week,

Jeff Morgan, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

Washington was back in action last week as financial regulatory reform moved forward in the House-Senate Conference Committee. The activity thus far has been a mix of grandstanding, politics and agreement on keys issues. I am sure you would expect nothing less, but handicapping the provisions in the final bill is a difficult exercise. Here is a summary of relevant provisions, but note that more intense negotiations have begun and I expect these items to evolve even further by week’s end.

• Federally mandated majority voting appears to be slowly fading and may be removed completely if Senate negotiators prevail.
• Federally mandated shareholder proxy access still seems probable, but we may see some of the key holding requirements mandated by Congress and not left to the SEC. A 5% ownership threshold and two year holding period are being discussed but are hotly contested by unions and large institutions as voiced by the Council of Institutional Investors.
• Federally mandated say-on-pay has been discussed and we may see a shift in the proposal from an annual period to every two or three years.
• SOX exemption for small businesses seems likely for those with less than $75 million in market capitalization.
• Large institutional managers will likely be required to disclose their compensation related votes.
• Shareholder voting on golden parachutes may not be included in the final bill.
• Enhanced incentive compensation rules are still being debated.

• Required daily reporting of short sales, prohibition against manipulative short sales, and required notification that customers may elect not to allow their securities to be used in connection with short sales and that the broker may receive compensation if the shares are so used.
• Providing the SEC with authority to adopt rules that would require more timely reporting when a person acquires more than a 5% ownership interest in an issuer.

The 2010 NIRI Annual Conference is now behind us and the initial feedback representative of the roughly 1,300 attendees was extremely upbeat – they left San Diego with positive energy and many immediately actionable ideas. The camaraderie was great and it was wonderful to see the new service providers and ideas in the IR Services Showcase. I was pleased to see more than 25 countries represented – an indicator of the global focus of our profession. Those interested in seeing and sharing Conference photos are invited to contribute to the NIRI Flickr site.

Meredith Cross, Director of the SEC’s Division of Corporation Finance was a highlight of the first general session. A video of her speech and the ensuing Q&A session is available to members on the NIRI website (other individual sessions will become available to members in the coming weeks for a nominal fee). If you did not attend I suggest spending 30 minutes listening to her comments. Cross gave a good overview of SEC activities affecting investor relations professionals mentioning, for example, the upcoming SEC evaluation of the U.S. proxy plumbing “system” and the need for all companies to weigh in with specific examples of problems they have experienced. SEC Chairman Schapiro reiterated this point in a speech last week, “… the mechanics of the proxy process have not kept pace with current market conditions or trading practices. For this reason, the Commission will soon consider publishing a Concept Release soliciting detailed ideas about how to modernize this voting infrastructure. We would like to hear about everything from whether the system of OBO/NOBO ownership should be changed, to whether proxy advisory firms should be subject to greater oversight (and if so, what that oversight should look like). I know that you and your companies will have important insights on these issues, and I look forward to your participation in this review.” I hope you will discuss internally your organization’s participation in this important process by commenting to the SEC later this summer.

Speaking of the SEC, the Commission updated the Reg FD Compliance and Disclosure Interpretations this past week with the addition of Question 101.11. While I think this item is stating the obvious, I pass it along as a reminder since the SEC saw the need to release it.

“Question: Does Regulation FD prohibit directors from speaking privately with a shareholder or groups of shareholders?

Answer: No. Regulation FD prohibits a company or a person acting on its behalf — such as directors, executive officers and investor relations personnel — from selectively disclosing material, non-public information to a shareholder under circumstances in which it is reasonably foreseeable that the shareholder will purchase or sell the company's securities on the basis of that information. If a company's directors are authorized to speak on behalf of the company and plan on speaking privately with a shareholder or group of shareholders, then the company should consider implementing policies and procedures intended to help avoid Regulation FD violations, such as pre-clearing discussion topics with the shareholder or having company counsel participate in the meeting. In addition, because Regulation FD does not apply to disclosures made to a person who expressly agrees to maintain the disclosed information in confidence, a private communication between an independent director and a shareholder would not present Regulation FD issues if the shareholder provided such an express agreement.”

Greetings from San Diego and the 2010 NIRI Annual Conference! As I write this we are midway through the Conference program. It has been an excellent program so far with much buzz around the great discussion and sharing among attendees as well as the several product announcements that have been made. For those of you unable to attend, we look forward to providing you with “nuggets of wisdom” in several forms over the next few weeks. I think everyone appreciated Monday’s speech and Q&A session with Meredith Cross, SEC Director of Corporation Finance. She kicked off Conference and set a great tone for the week in her comment that IROs play a crucial role in restoring confidence in our capital markets through effective investor communications.

Congress and the Senate took last week off for their Memorial Day recess, so I will only touch on the financial regulatory reform as it is all just chatter until the conference committee gets underway. However, Congressman Barney Frank, who is chairing the conference committee, has vowed that there will be no secret conference sessions between House and Senate members and all debates and votes will be conducted in opening meetings. This would be very unique for Washington and I look forward to see if others share his view.

While Congress is on recess, the SEC held a market structure roundtable with market participants sharing views on issues such as flash trading, market trading strategies, the flash crash, market fragmentation and other relevant issues. Missing from the roundtable discussion were the views of individual investors and issuers. With some of the dialogue becoming very contentious, I think the SEC has their work cut out for them to decide how best to improve the regulation to benefit all capital markets participants. However, it has become clear to me (and others) that status quo market regulation is not acceptable.

In other capital markets news, NASDAQ OMX Group announced its own methodology for circuit breakers. The NASDAQ scheme dubbed “volatility guard” will go beyond an SEC pilot program to place a trading delay on individual stocks that drop more than 10% in five minutes. The NASDAQ program looks to create trading pauses based upon volatility and stock price tiers for all NASDAQ listed stocks. Mechanisms for slowing trading during high volatility already exist at the NYSE. I suspect the SEC will seek to create some consistency among all exchanges and other trading venues so I look for the SEC to ultimately mandate the same action by all trading venues. As this will take some time, NASDAQ’s immediate move makes good sense.

Completely unrelated, but still in the capital markets category, I got a big smile from news last week of a Starbucks kiosk opening on the floor of the NYSE to “enhance the trading floor experience,” as one NYSE official put it.

As I close this week, I encourage Conference attendees to visit with exhibitors, along with attending all the great educational programs and engaging in the peer to peer interaction opportunities unique to this event. Exhibitors are a critical part of the educational experience and have tremendous knowledge and experience to share. Finally, for those who follow me on twitter or in my weekly blog, I was pleased to have the opportunity to stop by an IR “tweetup” at Conference. It is great to see NIRI members coming together to discuss IR, and so glad to see this informal gathering happening here. Social media is alive and well among some of the NIRI faithful.

Until next week,

Jeff Morgan, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

People that live and work in Washington seem to know and understand “positioning” – it is part politics, part marketing, part knowledge, part networking, part hard work and part timing. This past week held much positioning in Washington on issues that will impact on our profession.

First it was a week of lining up the House and Senate financial regulatory reform conference committee to be chaired by Barney Frank. His goal is complete the committee’s work during the third week of June in order to have a full House and Senate vote during the last week in June. That schedule would deliver a bill to the President’s desk before the July 4th recess. Before the committee has even met, Frank has pronounced that proxy access and say on pay will be in the final bill, while majority voting may be left off and handed to the SEC. I think there will be significant comment leading up to a final bill as everyone positions for what they want in the final legislation. I remain convinced this bill will have a considerable impact on corporate governance.

The SEC also engaged in some positioning last week as it proposed requiring a new consolidated audit trail system to track market trading. The need for the SEC to capture this data has been discussed before, but the May 6th “flash crash” provided the fuel to propose this immediately. The technology to collect this data (including beneficial ownership information) is estimated to require an initial investment of $4 billion and annual maintenance costs of $2 billion. The SEC believes it will take about three years to build and will enable it to capture about 100 gigabytes of data per day. I think this is long overdue. As IR practitioners we can sympathize with the SEC’s need – we are continually challenged by the difficulty in understanding who is buying or selling our stock. The SEC, on the other hand, has been somewhat unsympathetic to our needs in this area though NIRI has advocated on behalf of companies for more timely stock ownership information. Though the SEC’s audit trail data will not be public, I remain hopeful that the SEC will eventually understand the need for public companies to have a much better window into stock ownership.

While you probably don’t follow all SEC litigation news, I want to call your attention to a scheme by a Disney employee who was charged with insider trading by the SEC. I can only shake my head at an administrative assistant sending a solicitation letter to more than 20 hedge funds offering to sell financial results prior to release. This just tells me you can never assume people around you understand the basics of ethics and good judgment. Members are reminded to check the NIRI Code of Ethics for any questions.

Finally, NIRI members and IR service providers are preparing for their own positioning at the NIRI Annual Conference which begins this Sunday. For corporate members, conference is about in-depth IR education so we can provide even greater value to our companies. For counselors and consultants, it is much the same in that they can better serve current clients and gain new clients. For service providers and exhibitors, it is also about the education they will receive and the IR solutions they provide. For everyone, the NIRI Annual Conference provides community, networking and learning from each other. I look forward to seeing between one-quarter and one-third of NIRI members next week and hosting a great experience in San Diego. The NIRI Board and I are always looking for your input on your organization and the profession – please take the opportunity to stop by the NIRI booth on Monday during the morning and afternoon breaks and share your thoughts directly with us as we will be assembled there. During the afternoon break you can also visit with the editorial staff of IR Update at the NIRI booth and share your thoughts on the magazine and your story ideas.

Until next week,

Jeff Morgan, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

Last Thursday evening, the Senate passed a 1,600 page financial regulatory reform bill titled the “Restoring American Financial Stability Act of 2010.” Described as Wall Street reform, the bill had more than 400 proposed amendments of which only a few were considered. However, several of the amendments that were passed made the bill stronger than originally proposed which is somewhat counter to tradition. The bill now heads to a joint House-Senate committee for reconciliation, and a final bill could be passed by July 4th.

Major items in both bills include new consumer financial protection, more bank regulation, changes in financial market trading and new corporate governance measures. Many feel the corporate governance changes should not have been part of this “Wall Street reform bill” as they extend to all public companies, not just Wall Street financial institutions. The argument is that this was a backdoor way to make changes without public discussion or debate. I too am disappointed that these changes were not openly discussed on the House or Senate floor. While provisions may change in the final draft, let’s briefly review the current corporate governance provisions and possibilities for final legislation.

Say-on-Pay – House and Senate versions both include mandated annual shareholder advisory vote on executive compensation. This will be in the final bill although many would like to see a triennial period or some type of opt out for a high affirmative vote.

Proxy Access - Both versions have proxy access provisions ultimately making it clear the SEC has the authority to require it. This is being discussed among Democrats and Republicans, though many agree with companies that it is an extremely powerful provision to slip into a bill without public debate. The form of this may evolve by the final bill, but I think we need to assume the final bill will contain a proxy access provision as this bill has tremendous momentum. I also won’t be surprised to see proxy access challenged in court as a states’ rights issue even if approved at a federal level.

Majority Voting - The Senate version has a majority voting provision for uncontested director elections with a mandated corporate resignation policy – the House version does not. Majority voting is viewed by many as a more palatable solution to proxy access as companies are already implementing this. Adding this mandate to the final bill could allow for some negotiation on proxy access.

Independent Compensation Committees - Both versions require compensation committees to be independent and have the ability to hire independent consultants. It seems like this is assured in the final bill.

Clawbacks - The Senate version would require companies take back executive compensation earned on financials restated due to material noncompliance. The House version does not have this provision. I would not be surprised to see this become part of the final bill.

Hedging - The Senate version mandates disclosure of any employee or director stock compensation hedging. The House version does not have this provision. This may be left out of the final bill and moved to the SEC for consideration.

Compensation Disclosure - The Senate version requires several new compensation disclosures - a five year comparison of executive pay to stock performance, median employee compensation and a ratio of CEO to employee compensation. The House bill has no similar provision. Considering the public outrage over CEO salaries, I wouldn’t be surprised to see this in final legislation, though it may be handed to the SEC for consideration instead.

NYSE Rule 452 - The Senate version codifies Rule 452 to make director elections and compensation votes non-routine and ineligible for broker voting. The House version does not have a similar provision. My view is that this may be included in a final bill if Congress fears that a client directed voting solution might create the possibility of reestablishing the broker vote.

Whatever form the final legislation takes, it is clear to me that the investor relations role should be elevated in the mind of management. The upshot of many of these proposals is that effective relations with investors will become even more critical. Direct investor feedback, provided uniquely by IR, must be part of management and board discussions. This is the case now for some, but not all companies. This elevated, more strategic role requires the ability to provide deeper investor insight. NIRI will provide the skills, tactics and best practice models in the coming months to ensure your success.

In other news this past week, the SEC proposed an expected circuit breaker rule following the recent “flash crash.” The government continues to investigate the cause of the crash and the prevailing view seems to be that it was not the result of malicious or manipulative intent.

Finally, turning to NIRI, there are less than two weeks until the 2010 NIRI Annual Conference in San Diego. Members are still registering, so it is not too late to join your peers in the discussion and education on all aspects of IR, including the profession’s growing strategic influence. Register today – I look forward to seeing you on June 6-9! Lastly, our popular Regulations 101 Seminar is coming to Chicago on June 29. I recommend attending with your company’s legal counsel.

Until next week,

Jeff Morgan, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

As IR professionals, many of you have encountered days when your stock drops precipitously. Your CEO and CFO want immediate answers – what is happening? You might not know the cause, but you probably have clues and may be able to form a hypothesis – a big block just crossed with a large investor exiting their position; or the movement may have been related to a hedge fund selling you short to offset some risk in their portfolio; or your company was part of a quant trader’s portfolio and his model just went bearish. As frustrating as the mystery is, no one outside of your world seems to care – they just want answers. What if this happened to the entire market? That is exactly what happened on May 6 in what has been dubbed the “Flash Crash,” and everyone wants answers – regulators, exchanges, Congress and investors.

While the reasons for the dramatic drop have not yet been definitively identified, the event shines a light on some fundamental market structure challenges that IR professionals know very well including the trend of increasing fragmentation. The number of trading venues has grown (NASDAQ, NYSE, BATS, DirectEdge and Liquidnet to name a few) and it seems that coordinated market regulation needs to catch up swiftly. The SEC has acknowledged this recently issuing a concept release on equity market structure and proposed regulation of non-public trading interest including dark pools. NIRI expressed our concerns in a February 16 comment letter in which we stated that regulatory oversight and other investor safeguards must be in place for all trading venues, and that the effects of trading options, futures and derivatives must be carefully examined for negative implications. While we could not have predicted what happened May 6, it is this type of market hiccup that highlights our concerns and causes swift regulatory action. I believe new market safeguards will be in place quickly to ensure better exchange, ECN and ATS coordination, and will likely be in the form of some type of overall market circuit breaker. I am hopeful that this process helps our regulators understand some of the challenges we experience as IR professionals, and will lead to better trading and stock ownership transparency.

The Senate continues to work through financial reform – about 250 amendments – and yet many believe that we are nearing the end in the Senate with an affirmative vote. There have been no changes on governance reforms; all previously discussed provisions remain intact, although changes have been proposed to drop proxy access and majority voting. There are still several opportunities for change, but my opinion is that some version of a federally mandated advisory say-on-pay, clawbacks and increased disclosure are likely to be approved. Senate Majority Leader Reid filed a motion Monday for a vote Wednesday on whether to end debate. As for approval of any final legislation into law, House Financial Services Committee Chair Barney Frank has indicated passage will occur by July 4th and President Obama has indicated no later than Labor Day for final passage. A “Manager’s Amendment” at the end would be the most likely place for changes to governance provisions. Regardless, governance provisions have no current waiting period, so any governance changes will likely be effective in 2011. The silver lining for IR professionals is that, in my opinion, these changes continue to build the importance of the investor relations function.

As I close this week with a focus on NIRI activities, Senior Roundtable members should be sure to participate in Friday’s webinar on “Proxy Season 2010: Tales from the Front.” If you have been in IR for more than ten years and would like to apply to join Senior Roundtable, more details are here. Watch for two Executive Alerts in the near future – one with salary survey results for IR professionals, and the other on website disclosure. You should also know that the flash crash, governance changes and social media will also be discussed at Annual Conference, and it is not too late to register. During my Central Florida chapter visit last week, several members told me they planned to register the week before conference to ensure that things were calm in the office before booking flights. There is nothing wrong with waiting until the last week to register, so make your plans now and I look forward to seeing you in San Diego on June 6-9!

Until next week,

Jeff Morgan, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

Washington has been incredibly active over the past year. Regular readers of this column know that Congressional activities happening right now could redefine public companies’ relationships with investors. Based upon your feedback, I have targeted my weekly messages primarily to this subject to give you and your management a one page summary of the most relevant Washington issues.

Financial reform continues to move slowly in the Senate. The newest development of interest is the Carper amendment to remove shareholder nominated directors (proxy access) from the bill. Considering the Senate’s slow pace, I’d like to discuss a few IR practice related news items this week. I am sure you read with interest and a critical eye the news of Goldman Sachs’ fraud charges and the disastrous BP oil spill in the Gulf of Mexico.

At issue for our members in the Goldman situation is the disclosure decision around its receipt of a Wells Notice – a materiality and facts and circumstances challenge for any company. As you may know, a Wells Notice is a formal warning from a regulator of its intent to recommend enforcement. In many cases, parties often resolve the matter without charges being filed. This topic has been heavily debated by the press, and I think we can all feel compassion for the Goldman Sachs IR team as they navigate through a challenging passage. While such matters are often influenced by legal counsel, IR brings a unique perspective and must be in the mix as a key member of the disclosure committee determining how to proceed in situations like this.

The Gulf Coast oil spill impacts BP as well as related industry companies. I have little doubt that BP’s crisis management team is working full speed, and its IR professionals are putting in long hours. Like you, I will be watching these situations for learning opportunities and am hopeful that IROs from both organizations will share lessons learned.

Turning to investor disclosure, I call your attention to today’s NIRI IR Weekly “The Buzz” section story regarding the SEC’s examination of Berkshire Hathaway’s 13D disclosures around its Burlington Northern Sante Fe railroad purchase. One of our primary shareholder identification tools, the filing practices (or lack thereof) of institutional equity ownership forms, and what is perceived as lax SEC filing enforcement, have long been a source of consternation among NIRI members. Several NIRI Board members and I visited the SEC last year and voiced this issue as an area of ongoing concern for public companies.

At the intersection of disclosure and advocacy, NIRI and a NIRI Board Advocacy Committee member met with SEC staff last week to discuss the Commission’s 2008 interpretative guidance on the use of company web sites for disclosure. NIRI recently surveyed a segment of members on this matter to assist in our presentation (the results will be released in an upcoming Executive Alert). We discussed a wide range of topics from 3rd party web links to various methods for disseminating material and non-material information. The SEC provided a reminder that companies are covered from a Reg FD perspective if they file a Form 8-K for material disclosures. I look forward to the speech by Meredith Cross, Director, SEC Corporation Finance Division at NIRI’s upcoming Annual Conference to expand on this and bring us up to date on several other topics affecting investor relations.

The survey data that we shared with the SEC also hinted at interesting disclosure trends via newer electronic methods such as RSS, twitter and other social media. NIRI just launched a survey on social media use in IR to gain even further insight on this issue, and I encourage you to participate.

NIRI members should receive the latest issue of IR Update soon, and if you have any interest in Tom Peters’ latest book, we have added a link to it in NIRI’s Online Store. Also keep an eye out for NIRI’s latest compensation survey results. This survey is always of keen interest to IR professionals and I think everyone will appreciate the ability to benchmark their compensation in light of the recent recession. I trust you will find the results useful.

Until next week,

Jeff Morgan, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

The financial regulatory reform picture changed quickly in the Senate last week as the Republican filibuster succumbed to public pressure, a daily Banking Committee vote on the reform bill and lengthy testimony by Goldman executives. Debate has now moved to the Senate floor and will likely extend several weeks with many expecting at least 100 amendments to be offered. IR professionals should keep an eye on this legislation. Your company executives should also be watching and voicing your organization’s opinion on the legislation and proposed amendments to your Senator.

How might the new legislation affect you? As discussed for several weeks, the proposed corporate governance changes are relevant for all public companies. Banking and lending institutions are sure to be affected under the current bill. If your organization uses derivatives to hedge raw material purchases or manage risk you may be affected. If your organization extends any type of credit to consumers you may be affected. The list of those potentially impacted is extensive. Of the 1,400 pages of proposed legislation, amendments are most likely to be targeted at these provisions: 1) consumer protection, 2) the Volcker Rule, 3) derivatives, 4) “too big to fail” and 5) corporate governance.

Once the Senate votes in May (probably), don’t be surprised to see this legislation bypass a House-Senate conference to iron out differences. I believe it is more likely to go the route of healthcare legislation with the House approving the Senate bill or some similar route, with passage into law before the Memorial Day Congressional recess. The wind is at least blowing that way at the moment.

Why do I think this is likely? Washington successfully tapped into the Wall Street vs. Main Street populist anger last week with its public tongue-lashing of Goldman Sachs. Washington will capitalize on this strategy this week with more hearings including former SEC chairmen Christopher Cox and William Donaldson, executives from Bear Sterns, former Treasury Secretary Henry Paulson and current Treasury Secretary Tim Geithner. These hearings help to keep public pressure on Congress to pass legislation.

My perception is that outrage towards hedge funds seems to have decreased as the focus on large Wall Street firms has increased. I will be paying attention to this through the Senate debate over the next few weeks. Financial reform discussion in Europe includes hedge fund registration similar to U.S. proposals, but goes much farther in this area considering, for instance, limits on hedge fund borrowing and executive pay.

If you listened to NIRI’s webinar last week “Understanding New Short Selling Restrictions,” you would have also heard about a CESR (Committee of European Securities Regulators) consultation on short selling disclosure. This proposes a two-tiered system requiring short sellers to disclose their short position to the regulator upon reaching a certain threshold and public disclosure upon reaching another threshold. NIRI has long supported increased short position disclosure, and I hope U.S. regulators consider this as well.

Tomorrow, a small group of NIRI Board members and I will visit the SEC to discuss its July 2008 interpretive release on the use of corporate websites for disclosure to investors. At the meeting, we will share the results of a recent NIRI survey on this subject in advance of an Executive Alert planned for later this month.

In other SEC matters, I am hearing many rumors about the SEC’s proxy access proposal and would not be surprised to see a final rule come to a vote before the end of June, especially if Congress passes proxy access as part of the financial regulatory reform legislation. We are also expecting the long awaited proxy mechanics concept release (discussion draft) from the SEC. While it may be July before this is issued, I have begun to see action on some of the focus areas. For instance, NIRI has been advocating for proxy advisory service reform. I am pleased to see a proposal by Proxy Governance, Inc. (PGI) to reconstitute itself into more of a public utility model governed by investors and others. As I understand it, the proposal would address concerns outlined in NIRI’s discussion paper such as making PGI’s company-specific proxy recommendations public and providing retail shareholders with these advisories. I could imagine this evolving into a viable client-directed voting solution.

Don’t miss today’s NIRI webinar on “The Price of Reputation” with Jonathan Low and NIRI’s new IR Update editor, Gerry Romano. I also want to point your attention to Gerry’s exclusive NIRI interview with management guru Tom Peters in the May issue of IR Update which will arrive in your mailbox soon. Finally, we are closing in on four weeks until the 2010 NIRI Annual Conference. Register and make your hotel reservation now as rooms are filling up.

Until next week,

Jeff Morgan, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

Partisan rhetoric about financial regulatory reform continued at a high pitch this past week and culminated yesterday evening with a cloture vote in the Senate. As expected, the vote failed increasing the pressure on all sides of this debate. With another vote expected almost immediately, there is much activity behind closed doors though little information is publicly available or certain.

Over the last few weeks, several members have reached out to me with questions on financial regulatory and corporate governance reform. Here is a summary of our positioning on these important issues.

1. What is NIRI’s position on financial regulatory reform? NIRI does not have an official position on the overall reform bill as there are many issues in the current Dodd proposal that extend well beyond NIRI’s mission. I believe, however, that any reform that reduces the regulatory void between equities and derivatives, increases hedge fund transparency, and improves the efficiency and effectiveness of our capital markets would be in keeping with NIRI member’s interests. My sense is that many view the reform proposal as having a number of good parts, and something will ultimately be passed.

2. Why doesn’t NIRI support the specific corporate governance reforms as currently proposed in the financial regulatory reform legislation? NIRI’s Board is on the record supporting equity ownership transparency reform and a more efficient and effective proxy system. It is imperative these areas are improved as part of any federal movement to reform corporate governance and corporate-shareholder interaction. While public companies have adopted many of the proposed governance standards, these standards were not the cause of recession and a federal one size fits all approach to corporate governance is improper. As your CEO, I carry this message externally and partner with other organizations as it makes sense to broaden awareness of these issues. This isn’t about supporting one political party or another; this is about trying to create positive change for NIRI members, a job that I take very seriously as your advocate.

3. Are there other proposed corporate governance reform bills? There are several bills in play. Just last week, the Subcommittee on Capital Markets of the House Financial Services Committee had a very spirited debate on three bills: HR 2861 – Shareholder Empowerment Act, HR 3272 – Corporate Governance Reform Act, and HR 3351 – Proxy Voting Transparency Act. However, Dodd’s Senate Banking Committee bill will draw the most attention until its status becomes more certain. With the significant attention on financial regulatory reform, don’t lose sight of any campaign reform discussions as they may become IR issues. For example, bills like the HR 4790 – Shareholder Protection Act have been proposed that call for a shareholder vote outlining all political activities for the upcoming year and require shareholder approval.

Speaking of the proxy, SEC staff spoke publically last week about the upcoming concept release (or discussion paper) on proxy mechanics. As you know, NIRI and the Shareholder Communications Coalition have partnered to advocate for proxy process reforms. The SEC staff indicated the following would be discussed as part of the concept release (likely to be released in the next sixty days): OBO/NOBO issues, client direct voting, proxy vote integrity, proxy reconciliation, proxy advisory services and proxy fees. These are the specific issues we have urged the SEC to examine. In the area of proxy advisory firms, the SEC indicated there seem to be two possible regulatory paths – regulation under the Investment Advisors Act, or develop regulation specific to proxy advisory firms. This regulation is consistent with our recent white paper, and I am pleased with the comments and movement by the SEC.

Turning to NIRI matters, later today I will moderate a member webinar on the new short sale uptick/circuit break rule. Finally, on behalf of the entire NIRI organization, I want to express our thanks to Katherine Philipp who has been NIRI’s Director of Professional Development for the past ten years. Katherine is retiring in early May to spend time with her family and grandchildren. I am sure you will want to join me in wishing Katherine all the best as she moves into the next phase of her life.

Until next week,

Jeff Morgan, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

As I indicated last week, financial reform activity heated up in Washington this past week and will likely continue until legislation is passed. I believe the debate has moved from if there will be legislation to what it will contain – including corporate governance reform. Rhetoric picked up dramatically with Democrats taking a hard line. Emboldened by their healthcare victory, by public desire for Wall Street reform and by word that at least eight Republican senators may support reform, Democrats seem uninterested in compromise. Friday’s SEC fraud suit against Goldman added further fuel (the timing seems very curious). Finally, recent strong bank earnings have Democrats salivating. President Obama has even taken shots at Republicans who might oppose reform saying they are in Wall Street’s pocket. A Senate vote in the next few weeks is likely and final legislation by Memorial Day is possible.

NIRI went on record in a letter to Senate members, joining groups like the Business Roundtable and the Chamber of Commerce, opposing the proposed corporate governance reforms due to the potential for unintended consequences. The letter asserts that the corporate governance provisions included in the proposal were unrelated to the recent financial downturn and should not be part of financial regulatory reform.

With so much focus on Congress, let’s not forget about the SEC’s active agenda. I can’t recall a time when the Commission has cast such a wide net over so many issues and had as many proposals in process. The latest proposal would create a large trader reporting system that will allow the SEC to identify large market participants, collect information on their trades, and analyze their activities such as high frequency trading. With a goal of better spotting and analyzing illegal trading activity, this makes good sense in my opinion and will help investors and public companies. The comment period is 60 days, but just as the proposal passed the SEC by 5-0, I expect the same for the final proposal with a quick turnaround time.

Meredith Cross, Director of the SEC’s Division of Corporation Finance and general session speaker at NIRI’s 2010 Annual Conference, indicated that SEC staff is watching closely shareholder proposals about political contributions with an eye toward potential changes. This confirms what I have suggested to you for several weeks. Speaking of political contributions, you might also be interested to learn that Federal Election Commission records show at least ten of the largest hedge fund managers contributed nearly $1 million to campaign accounts with (one can assume) hopes of moderating the impact financial reform on them and maintaining the lack of hedge fund transparency. Many have said it is working. Senator Dodd, Senate Banking Committee Chairman, was one of the major recipients of those hedge fund connected political contributions.

On the NIRI front this week, Annual Conference registrations are ahead of last year, so reserve your room at the Manchester Grand Hyatt in San Diego soon – go to www.niri.org/conference for special NIRI room rates. You’ll soon receive a Conference brochure in the mail with details on sessions and logistics; you may also view the brochure online. A Conference highlight for me will be the “Update from SEC leadership.” I also look forward to moderating “Evolution of Issuers and their Exchanges” with NASDAQ OMX and NYSE Euronext. I will see you in San Diego!

Until next week,

Jeff Morgan, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

Congress is back in session after a two week break with financial regulatory reform on the front burner. To make sure you are ready to follow along, I’ve provided some thoughts and questions on what to think about as Washington moves through financial reform, including corporate governance reform legislation.

1. With newfound strength after passing healthcare legislation, will Democrats flex their muscle and make only minor changes to the financial reform proposal in order to get a few Republicans on board, or will they truly reach across the aisle to get a strong bipartisan bill? Republicans say they are ready to compromise, but nobody is sure exactly what that means, nor is anyone saying where Democrats may be willing to compromise.

2. Less than seven months remain until mid-term congressional elections and both parties see financial regulatory reform as a critical piece of pre-election positioning. Thirty-six Senate seats (18 currently held by Republicans and 18 by Democrats) and all 435 House seats will be up for election. Beating up corporations has played well in the press and to many unemployed Americans over the last two years. Will this continue through the election season or will politicians acknowledge companies’ fear of overregulation, offering them an olive branch by taking a regulatory breather in hopes of further stimulating the economy? If business continues to be portrayed as the “bad guy,” expect corporate governance reforms to be harsh.

3. What role will labor unions play? They stand firmly behind corporate governance reform and plan to descend upon New York City with a “March on Wall Street” protest rally on April 29 to promote financial regulatory reform. Will corporations work to counter the seemingly strong influence of labor unions in Washington?

4. Will Supreme Court Justice John Paul Stevens’ retirement announcement disrupt the legislative agenda, ultimately leading to willingness on the part of Democrats to compromise on financial reform in order to ensure passage? This appointment has potentially huge ramifications and could affect the financial reform and other legislative agendas in Washington. Don’t be surprised if the administration delays announcing a nominee in order to remain focused on its legislative agenda.

Let’s review some of the corporate governance reform provision specifics:

• Non-binding Say-on-Pay – I expect this to pass in some form, although the Democratic controlled Senate is now pushing to make all executive compensation issues non-routine and exclude the broker vote. Will this provision be dropped, and will companies be permitted to skip the annual cycle if they receive a certain approval threshold? Or will the Republican’s triennial approach win out?

• Pay vs. Performance Disclosure – Look for much focus on a proposal mandating new disclosure comparing executive compensation to stock performance. Many consider this to be an unfair comparison without other supporting information.

• Clawbacks – Expected to pass, the only question is what form the clawbacks will take.

• Shareholder Nominated Directors – This will be the most heavily contested of the proposed corporate governance reforms. Democrats have the support of labor unions and shareholder activists and are pushing hard for it. Republicans, supported by public companies, say it will be devastating to corporations and shareholder value. Many consider this to be a Waterloo for businesses and I expect it to be a hard fought battle in the Senate, continuing at the SEC and then possibly in the courts.

• Independent Compensation Committees – I expect this to pass.

• Majority Voting – If this doesn’t pass for uncontested elections, I would not be surprised to see the SEC take this up as a disclosure item, requiring companies to explain the absence of majority voting. Expect other disclosures, like political contributions, to be considered by the SEC in coming months as well.

How will this proceed? Similar to healthcare reform, all eyes will initially be on the Senate as the House has already passed a financial reform bill. The Senate battle will ultimately result in an up or down vote. If the bill passes the Senate, there will be some type of reconciliation to bring House and Senate bills together. The corporate governance provisions are just pieces of larger segments that impact banks and Wall Street – segments that include, for example, the proposed new Consumer Financial Protection Agency and systemic risk concepts like “too big to fail.” This will be the talk of Main Street, Wall Street and D.C. for some time to come, and I look forward to bringing you weekly updates as things ebb and flow.

Until next week,

Jeff Morgan, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

With Congress on Easter recess, the action in Washington last week was centered on the cherry blossoms and the attendant tourists. For those of us who live in D.C., this is a time to alter our driving patterns and avoid the crowds. Next week the crowds elected to Congress return and the activity moves back to Capitol Hill. For now, we will enjoy the change of pace.

Speaking of change in pace, I want to point out just a few things this week and then hopefully leave you with a smile. First, I was disappointed to see employees of several investor relations firms charged with insider trading. Two were former NIRI members. This serves as another reminder of the need to protect client/customer confidentiality and ensure compliance is taken seriously at all levels. I also remind NIRI members that as a condition of membership, every NIRI member agrees to a stringent Code of Ethics based on the principals of integrity and ethical behavior. NIRI does not tolerate deviations from this Code – the reputation of the profession reflects on the personal credibility of each practitioner.

Staying in enforcement, the SEC is considering publishing details when companies and executives settle SEC lawsuits with sanctions and a fine. The SEC implies that it desires to be more transparent. However, it sounds like one potential outcome could be more shareholder suits and legal costs for companies.

As we look to NIRI news, you may recall the March 3, 2010 NIRI Executive Alert about the SEC’s recent notice and access amendments. In the Alert we also discussed the growing prominence of the retail shareholder vote in light of last year’s change to NYSE Rule 452, and provided investor relations recommendations to help retail holders understand their role in corporate governance. Today we took this message directly to individual investors with an article I submitted to Motley Fool titled, “Corporate America Wants Your Vote.”

Two NIRI education events are coming up next week – a two day seminar on “Finance Essentials for IR” in New York, and a webinar to supplement the recent Executive Alert on “Breaking the Silence About the Quiet Period and Trading Blackouts” on the afternoon of April 13. I also look forward to providing a Washington update to the NIRI Seattle chapter later this week.

In closing, a few weeks ago I had the pleasure of serving on a NIRI chapter panel with Doug Wilburne, CFA and Vice President of IR at Textron Inc. Doug provided a lighthearted moment when he gave a Letterman-style top ten list of what IR professionals think about (but don’t necessarily say!) when explaining negative stock price movements to management. I hope you enjoy the humorous list:

10. Take-over Rumor – “The take-over rumor is losing its legs.”
9. Four Times/Year – “Pre-earnings release uncertainty.”
8. Wall Street Greed Factor – “Profit-taking.”
7. Misery Loves Company – “The overall market was down.”
6. Technicals – “We’re bumping up against the square-root of our inverse 200-day moving high threshold,” or some other imaginary absurd answer.
5. Modern Trading Practices – “Program trading.”
4. Statistical – “We have been outperforming our peers, so it was just a reversion to the mean.”
3. Spiritual – “Friday is quadruple witching hour.”
2. Appeal to the Economist in Every CEO – “Supply of shares for sale today was greater than demand.” (Or, “More sellers than buyers.”)
1. And, the #1 Answer – “If I really knew what drove stock prices, would I be doing this job????”

Until next week,

Jeff Morgan, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

Partisan rhetoric in Washington reached a fevered pitch over the last few weeks with healthcare reform passage. The Democrats, feeling momentum from their healthcare victory, are now targeting financial regulatory reform including corporate governance. With Republicans now on the defensive, many expect the partisan rhetoric to move to your home state over the two week Easter recess. However, some Republicans (particularly those new to Congress) are wondering if that is the best strategy and may be pushing for changes. Some believe Democrats and Republicans are not far apart on financial reform. Many (I am one) think financial reform is a sure thing, so better to have a voice in the reform then to accept bad legislation. In any case, there will be many closed door discussions in Washington over the next two weeks negotiating changes to the Senate version (as well as an ultimate House and Senate compromise on differences) that will likely be approved in the near future.

A few notable items this week:

• Dividend payers should be aware that 2003 tax cuts which lowered tax rates on capital gains and dividends are set to expire. Groups like Defend My Dividend are trying to raise awareness and urge Congress not to repeal these tax breaks, but there appears to be little interest in Washington. For IR professionals, this could affect how individuals invest and change corporate capital deployment strategies. If your organization might be affected, strategize now and make your views about these tax increases known in Washington.

• The NY Law Journal recently published an article called Avoid the Traps in Investor and Analyst Calls, about the challenges associated with competitors and the government listening to your public conference calls. The article requires free registration, but is worth reading and sharing with your management team.

Focusing on NIRI this week, yesterday several members and I made NIRI’s annual visit to FASB in Connecticut, and this year’s discussion topics included: IFRS, financial statement presentation and disclosure. Last week, I felt privileged and proud to watch former NIRI Chairs (who were titled “President” at the time) Kay Breakstone (1980-81) and Carol Ruth (1983-84) receive IR Magazine’s Lifetime Achievement in Investor Relations award. Many NIRI members also received individual award honors. My congratulations to all the nominees and winners!

Don’t miss today’s NIRI member webinar as Pat McGurn with RiskMetrics Group discusses the hot areas of this year’s proxy season.

Finally, tomorrow marks the end of NIRI’s early-bird discounted annual conference rate of $200 off the regular price. I spent the better part of a day last week with the member led conference committee planning for general sessions and breakout sessions. I am particularly impressed this year with the committee’s decision to add extensive Sunday and Wednesday afternoon workshops. You have the ability to extend your educational experience and get a solid four days of education that fit into standard flight arrival and departure patterns for those coming from the East Coast, so take advantage of this special opportunity that stretches your conference registration fee even further. If you need help justifying conference attendance, use this to show how your attendance will be valuable to your own organization. April 1st marks higher conference rates, so don’t fool around and register today or tomorrow!

Until next week,

Jeff Morgan, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

Healthcare reform regulation passed in Washington and like many of you, I am dismayed at the unhealthy political climate in our capitol. Will this reform now become a major tipping point? Among the many potential implications include the outcomes of fall elections. There will be plenty of time to watch this unfold, so let’s instead focus on issues closer to investor relations.

Will the present Democratic momentum carry over into financial and corporate governance reform? Or will we move past the populist view to really get at the root of the problems in our financial system? Many in IR understand that this populist view partially blames corporate greed for the recent recession. Elected officials, in turn, feel pressure to create more corporate management transparency and accountability; while stock trading transparency, derivative use, hedge fund actions and other areas are left as a second tier problem that may go unaddressed. With financial regulatory reform moving to center stage, my hope is the negative energy in Washington will be applied to a positive outcome. I also hope companies make their voices heard in this discussion as we are the fuel for the U.S. economic engine.

As I step off my soapbox, let me point out a few things that have come across my desk this past week that highlight the continuing importance of corporate IR:

• The London Stock Exchange released a new publication: “Investor Relations – A Practical Guide.” While very basic, information like this should help companies of all sizes understand the importance of the investor relations function.

• Direct Edge was officially approved as an exchange, and has indicated it will focus on converging asset classes and new products as it moves to differentiate itself from the exchanges.

• Bloomberg announced it will build an equity research function. I find this very interesting considering its other business lines including media. While I am sure there will be firewalls between news and research, it is a significant announcement.

• Please take a look at zEthics, an organization offering a loyalty program for corporate tattling. They appear to leverage the SEC’s announced expansion of whistleblower payments as “zEthics initiates claims with the SEC on your behalf to ensure that all questionable business practices at publicly traded companies are investigated, and follows up to keep you informed of progress.”

• Also be sure to take a look at Trefis. This company looks to take your corporate reports and link your product line directly to a forecasted stock price.

Looking to NIRI events, we will host a webinar next week with Patrick McGurn sharing the RiskMetrics view of the 2010 proxy season. We will hold another webinar on April 13 to compliment the soon to be released NIRI Executive Alert on quiet periods and trading blackouts. And don’t forget that early-bird discounts for NIRI’s 2010 Annual Conference end next Wednesday, so register now. Finally, I am saddened to report that Marvin Krasnansky recently passed away at the age of 80. Longtime NIRI members will remember Marvin, who retired as head of Corporate Relations – both IR and Communications – at McKesson Corp., as an early IR standout.

Until next week,

Jeff Morgan, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

Events have suddenly aligned in Washington to allow for a shot at passing healthcare reform and for lining up the next area – financial regulatory (including corporate) reform. I can’t predict the outcome of the healthcare bill, but I can predict that it will be a big issue for fall elections. Financial regulatory reform, on the other hand, has the potential to dramatically impact investor relations (IR) professionals, so it will be my focus in the coming weeks. The action will begin with debate in the Senate Banking Committee over the bill Chairman Dodd released yesterday.

You may know that there has been a push for a bipartisan bill for months and that recent rumor hinted that the sides were very close to an agreement. However, Chairman Dodd wants to pass a bill before his fall retirement and with time running out, the Democratic Banking Chair has decided to go it alone. According to Dodd, the two areas of largest disagreement are consumer protection and corporate governance. While I have not yet reviewed the 1,333 pages completely, some highlights of the bill that affect IR and are part of the contentious corporate governance reform include federally mandated say-on-pay and proxy access, as well as majority voting in uncontested elections. If approved, implementation would be the SEC’s responsibility. It is likely the SEC would model say-on-pay on the requirements for TARP companies (2009), and proxy access would probably look similar to the SEC’s still outstanding 2009 proposal.

Other provisions include requirements that compensation committees be comprised solely of independent directors, and corporate policies mandating “take backs” if compensation is based on inaccurate financial statements. The draft bill also directs the SEC to require companies to make new disclosure comparing executive compensation with stock performance over a five-year period. I cannot find anything in the bill that is similar to the small company SOX exemption considered by the House and that is a concern. Committee bill mark-up is scheduled to begin next week, and considering the disagreement in both House and Senate, this will likely generate plenty of news. I will keep you up to date as this plays out.

NIRI and the Society of Corporate Secretaries have been focused on reform for the past several months, particularly in the area of proxy advisory services. I mentioned the points below several weeks ago and now want to provide you with the nine page discussion paper on this issue. I urge you to read the short discussion draft adopted by your NIRI Board and submitted to the SEC last week. Recommended reforms include:

• All proxy advisory firms to be required to register as investment advisers, and the SEC to develop a unique regulatory framework for these firms under the Investment Advisers Act of 1940.

• Proxy advisory firms to be required to publicly disclose their internal procedures, guidelines, standards, methodologies, and assumptions for developing voting recommendations and voting decisions.

• The SEC and the Labor Department should prescribe a more robust due diligence process for institutional investors and those investors should disclose their methodologies (including any voting guidelines provided to a proxy advisory firm).

• Proxy advisory firms to be required to maintain a public record of all their voting recommendations and voting decisions.

• All institutional investors using proxy advisory services - including pension funds, hedge funds, and private equity funds - to be required to publicly disclose the actual proxy votes cast by them (or on their behalf).

• Sufficient opportunity for public companies to review draft reports of proxy advisory firms for accuracy and to respond to comments or recommendations with which they do not agree.

• Proxy advisory firms also should be required to disclose any public company's response to their voting recommendations or analysis.

• Proxy advisory firms should be required to publicly disclose any voting errors made in executing or processing voting instructions.

Finally, a few NIRI items for your consideration. First, don’t miss the second part of the member webinar on investor targeting later today. I am also pleased to announce Meredith Cross as one of the speakers at the 2010 NIRI Annual Conference in June. Ms. Cross heads up the SEC’s Division of Corporation Finance and is taking the lead on issues like corporate disclosure, proxy mechanics reform, proxy access and improving shareholder communications. If you have not attended NIRI’s Regulations 101 seminar, your next opportunity is April 7 in Chicago. This popular seminar is ideal for both new IR professionals looking for an in-depth regulations primer, as well as seasoned IR professionals and corporate counsel interested in ensuring they have solid internal practices. Lastly, corporate members please take a moment to complete NIRI’s biennial corporate member IR compensation survey.

Until next week,

Jeff Morgan, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

As we enter the second week of March, a Senate Banking Committee financial reform bill (that will include corporate governance reforms) continues to be negotiated by Democrats and Republicans without agreement. Dodd first released a draft of a very aggressive bill that was doomed for failure in November and then immediately started bi-partisan discussions to reach a compromise position. For the last several weeks, I have been suggesting that a bill should be released soon. The delay and area of disagreement is on the CFPA or a Consumer Financial Protection Agency. So we continue to wait and watch as I expect a bipartisan bill to be more favorable for corporate governance reform. So, I am happy to wait.

This past week's big news was that sales of RiskMetrics to MCSI. MCSI is known as a financial index and investment services firm. In a recent call to discuss the purchase, MCSI indicated they expected cost savings from consolidation of operations and while the ISS proxy advisory portion is a “non-core" business, it is expected to generate cash to help MCSI pay down debt. I can't help but wonder whether this means fees will increase or ISS will be sold off. To that end, NIRI and the Society of Corporate Secretaries and Governance Professionals have completed a white paper outlining some of the conflicts and problems with proxy advisory firms. I shared the major points with you a couple weeks ago and I will share this discussion paper with you next week, as this is an area NIRI is advocating for change.

Since things at the SEC were slow this past week, I thought I would share with you some of the enforcement cases the SEC brought this past week. The one that stood out was against a psychic for fraud as he touted his ability to predict the stock market. I find it sad that he was able to get $6 million dollars from than 100 investors. As many of my twitter friends said "he should have seen it coming!" Other enforcement actions this week included:

• a San Diego Brokerage firm with failure to supervise employees,
• a ponzi scheme targeting retired Los Angeles bus drivers,
• Iowa insurance executives charged with misleading proxy disclosure, and
• a Miami couple with a $135 million dollar ponzi scheme.

March arrived lamb-like in Washington as we await Senate Banking Committee Chairman Dodd’s draft financial regulatory legislation and wonder if it will ultimately have the bite of a lion. Republican Senators Shelby and Corker continue their dance with Dodd trying to create a bipartisan effort. However, others are already lining up at the SEC’s door to urge new corporate disclosure in advance of potential new regulation. The current corporate governance philosophy seems to be that if you can’t pass legislation requiring companies to implement a particular practice, you can have the SEC require companies to disclose why they haven’t implemented it. Expect additional disclosure to be an SEC focus for many months, with possible new disclosures including why companies don’t have majority voting, say-on-pay, or even political contributions to name a few.

This past week I attended the SEC’s meeting to approve a new short sale circuit breaker/uptick requirement. While compliance won’t be required until six months from the effective date (i.e. sometime this fall), the new rule is being met with heavy criticism. The new alternative uptick rule (in a 331 page adopting release) specifies that short selling will only be allowed at a price above the national best bid. The press release states, “the circuit breaker would be triggered for a security any day in which the price declines by 10 percent or more from the prior day's closing price. Once the circuit breaker has been triggered, the alternative uptick rule would apply to short sale orders in that security for the remainder of the day as well as the following day.” The criticisms are numerous with many focusing on unintended consequences and the lack of evidence to support this action. SEC staff indicated their rationale was largely based upon the crush of pro-regulation comment letters.

The Commission also reconfirmed it would consider IFRS adoption in 2011 to address claims that it was waffling. However, according to the press release, “the Commission also directed its staff to execute a Work Plan, the results of which will aid the Commission in its evaluation of the impact that the use of IFRS by U.S. companies would have on the U.S. securities market. Included in this Work Plan will be consideration of IFRS, as it exists today and after the completion of various "convergence projects" currently underway between U.S. and international accounting standards-setters. By 2011, assuming completion of these convergence projects and the staff's Work Plan, the Commission will decide whether to incorporate IFRS into the U.S. financial reporting system, and if so, when and how.” It certainly doesn’t sound like a sure thing.

I participated on an industry call with the SEC last week to discuss retail investor education related to proxy voting. To help investors understand the importance of their participation, the SEC is urging companies to post educational information to their corporate websites such as links to the SEC’s new “Spotlight on Proxy Matters,” and “New Shareholder Voting Rules for 2010 Proxy Season” web pages. NIRI expects to release an Executive Alert tomorrow that provides more information on this issue including SEC approved e-proxy changes.

Also under the heading of education, the SEC announced an upcoming public seminar on March 23rd to help companies and preparers comply with XBRL rules.

Moving to NIRI activities this week, I am participating today in a Chicago Chapter “Capital Markets Mini-Workshop,” and later in the week I look forward to visiting the Charlotte and Triangle Chapters. Finally, don’t forget today’s NIRI webinar, “Why CSR is Compelling for IROs.”

Until next week,

Jeff Morgan, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

SEC Action Has Current Proxy Season Implications

Washington seems to finally have its voice back after several weeks of assessing the political fallout from the Massachusetts Democratic Senate loss. The apparent new strategy has President Obama creating a bit of separation from Congress, while publicly positioning Democrats as willing to work with Republicans. Despite the huge Democratic majority in both House and Senate, they still appear to be hurting, and Republicans still seem to be in a “vote no” posture.

It will be an interesting test when Committee Chairman Dodd likely unveils a Democratic Senate financial services reform bill this week. As I mentioned last week, Republicans appear split creating uncertainty around the potential for an alternative Senate Republican bill. Things are fluid and there is much action behind closed doors. Regardless, the two keys will be the ultimate content of the bill, and Republican reaction. Hearings will follow, and we could possibly see the Senate vote in early spring on a bill that includes corporate governance reform. I will keep you up to date as this plays out.

The SEC was relatively quiet last week, although during a visit, I could not help noticing the “Who’s Who” of Washington influencers in the lobby. That confirms what I have been telling you about the importance of the SEC as a change agent in Washington. Speaking of the SEC’s importance, Commissioner Walter was very vocal about the need for better MD&A disclosures in a recent speech. She indicated that boilerplate disclosure should be replaced with a more dynamic approach telling each company’s unique story. While this is only one of five Commissioner’s comments, it is worthwhile watching to see if there is change in the wind on MD&A.

In a move with implications for the current proxy season, yesterday the Commission issued an adopting release regarding amendments to Notice and Access, or “e-proxy” rules, originally proposed last October. As you know, NIRI has advocated on your behalf for e-proxy improvements, and we are pleased the SEC will provide issuers flexibility in the language and formatting of the Notice. The Commission concurrently announced a series of education initiatives to help investors understand the proxy voting process and encourage greater investor participation in corporate elections. Look for a NIRI Executive Alert in the near future summarizing these important developments.

Other Commission items of note for this week include two open meetings. The first was yesterday’s Investor Advisory Committee meeting. This committee, while no different than past SEC advisory committees, is being used to vet projects in advance of potential Commission actions. The committee recommended the SEC issue interpretive guidance regarding Reg. FD compliance and shareholder/investor meetings, and that it study the costs/benefits of data-tagging proxy filings. As the name suggests, this committee only represents the voice of the investor. Based upon some of the committee discussions, I think the SEC missed an opportunity to increase the committee’s value by broadening its scope, perhaps creating a “markets” advisory committee – complete with investors, issuers, and other market participants – that would have been more in keeping with the full mission of the SEC.

The other open meeting will be tomorrow to consider adopting proposed short sale restrictions, and to consider publishing a statement regarding the Commission’s continued support for a single global accounting standard and incorporating IFRS into the U.S. financial reporting system.

Yesterday I had the pleasure of joining NIRI’s Kansas City Chapter as they rang the bell at the Kansas City-based BATS exchange. In closing this week, I want to make sure you are aware of several NIRI member benefits – today’s Non-GAAP Financial Reporting webinar, and next week’s CSR and ESG webinar. As always, these recorded webinars are free to members, while non-members can obtain this education for $149.00. And considering that we are now nearing the end of earnings season, I encourage you to set up your profile and join in the conversations on NIRI’s newest member benefit, our eGroups social networking forum. Your peers are there, why aren’t you?

Until next week,

Jeff Morgan, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

Weather woes in D.C. continued last week with the federal government closed for four days due to unprecedented and record setting snowfalls. Congress postponed hearings and votes, but political heat kept the city active. I noted last week that disagreement between ranking Democrats and Republicans in the Senate Banking Committee seemed to indicate two reform bills would be forthcoming. However, Republican Senator Corker appears to have broken ranks to work with Chairman Dodd in developing a bipartisan financial reform bill. The freshman Corker has been itching to take the lead and we will see if he and Dodd can agree, and if he can also bring a majority of Republicans along. Needless to say, things are in flux.

Things were much quieter at the SEC with only a couple of updates:

• In what seems like a logical move, the SEC is transferring responsibility for XBRL taxonomy maintenance to FASB and FAF.

• The SEC has indicated companies are asking questions about the new disclosure rules regarding directors. The SEC has said it is most interested in the director selection process rather than a great deal of information on each director. IR professionals should be ready to explain this process to investors.

• As the SEC moves closer to a vote on new short selling rules, the Managed Funds Association (MFA) released the results of a survey indicating negative effects of public short-sale disclosure in the U.K. The MFA urges daily short selling information should be provided strictly to regulators due to concerns among hedge funds that public disclosure would divulge competitive information creating market inefficiencies and making trading more expensive. I find it encouraging, however, that there seems to be a distinct softening of objection to a 13F and 13D type of short disclosure. NIRI has been advocating for this type of disclosure, and I am pleased to see others supporting this position.

Speaking of advocacy, NIRI filed a comment letter with the SEC today on increased pre- and post-trade transparency for darkpools and other ATS’s. I encourage you to read this short letter to see how NIRI is representing your unique view as investor relations professionals.

Also in the area of advocacy, NIRI and the Society of Corporate Secretaries and Governance Professionals have been developing a discussion paper on proxy advisory service reform. The draft will be released soon and focuses on the following:

• All proxy advisory firms to be required to register as investment advisers, and the SEC to develop a unique regulatory framework for these firms under the Investment Advisers Act of 1940.

• Proxy advisory firms to be required to publicly disclose their internal procedures, guidelines, standards, methodologies, and assumptions for developing voting recommendations and voting decisions.

• The SEC and the Labor Department should prescribe a more robust due diligence process for institutional investors and those investors should disclose their methodologies (including any voting guidelines provided to a proxy advisory firm).

• Proxy advisory firms to be required to maintain a public record of all their voting recommendations and voting decisions.

• All institutional investors using proxy advisory services - including pension funds, hedge funds, and private equity funds - to be required to publicly disclose the actual proxy votes cast by them (or on their behalf).

• Sufficient opportunity for public companies to review draft reports of proxy advisory firms for accuracy and to respond to comments or recommendations with which they do not agree.

• Proxy advisory firms also should be required to disclose any public company's response to their voting recommendations or analysis.

• Proxy advisory firms should be required to publicly disclose any voting errors made in executing or processing voting instructions.

I hope you received and read NIRI’s Executive Alert on the ”SEC’s Climate Change Disclosure Guidance.” We will host a webinar on this and the broader topic of CSR on March 2nd. Finally, with all the snow on the ground here in the capitol, it is hard to believe that we are only a few weeks away from the early bird deadline for the NIRI Annual Conference. Registration has been strong with the need to be up to speed on all the issues swirling around IR professionals. Don’t delay – register today to reserve your spot to be part of the education, networking and rewarding times at annual conference.

Until next week,

Jeff Morgan, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

The tone in Washington this past week reflected the recent 30+ inch crippling storm – things seemed quiet on the outside, but behind closed doors there was a lot of activity. A few things on the political side to note this week:

• The Senate Banking Committee’s financial reform bill quietly stalled as Democrats and Republicans failed to reach agreement. Expectations are that we may see both Democratic (Dodd) and Republican (Shelby) Senate bill drafts very shortly. While the Democratic bill will likely contain say-on-pay, majority voting, annual director elections, and proxy access, I don’t expect these in the Republican bill. Things will definitely heat up here as the committee begins public discussions.

• On the Congressional side, Barney Frank can’t stand the quiet and is now calling for salary disclosure of Wall Street’s top performers.

• Democratic Senator Schumer and others are also calling for disclosure and shareholder approval before companies engage in political activities. Suggestions like this will continue to create more divisiveness between Democrats and Republicans.

• President Obama released his proposed budget including a 10.3% proposed increase for the SEC to boost enforcement – about 70 more positions.

The SEC continues to be an active agency and here is the relevant update for the past week:

• At the top of the list was the release of the SEC Interpretive Release Regarding Climate Change Disclosure. While many are critical of the SEC issuing this release, I urge you to read it and to be a part of the internal discussion on presentation of this information to investors. The release also indicates the SEC will hold a public roundtable in the spring on climate change disclosure matters and will determine if further guidance or additional rulemaking is appropriate. NIRI will provide more information on this including a NIRI webinar on March 2nd. My thanks to those who have been actively discussing this issue on NIRI’s eGroups.

• As I have mentioned over the past few weeks, the SEC is expected to rule on additional short selling uptick/circuit breaker curbs in the coming weeks. I am pleased to continue hearing positive things regarding the changes.

• I also remain puzzled that the SEC has not approved the straightforward Notice & Access changes suggested late in 2009. The Commission has not been forthcoming with information leading me to speculate that this may relate to some views there that Notice & Access should be discontinued.

• NIRI and the Society of Corporate Secretaries and Governance Professionals have been working on a discussion draft regarding proxy advisory services that we expect to release soon.

• NIRI is also finalizing a comment letter to the SEC on darkpools that we will share with you in the near future.

Finally, I want to pass along a link to a webinar about the convergence of IR and governance held last week at the NYSE where I served as a panelist. Panelists included NIRI member Mickey Foster, head of IR at FedEx, and Paul Washington, Deputy General Counsel & Corporate Secretary with Time Warner. Paul is also the current Chair of the Society of Corporate Secretaries and Governance Professionals. Judy McLevey, VP of Corporate Actions and Market Watch at the NYSE moderated.

Until next week,

Jeff Morgan, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

This past week was very active at the SEC, but before I brief you on the SEC actions, let me update you on the politics of Washington:

• Obama’s “Rescue, Rebuild, Restore America” State of the Union speech seems to have been met by Washington insiders and the American public with both politeness and a resounding “prove it” that things will change.

• Ben Bernanke was indeed confirmed for a second term as Federal Reserve Chair, but was (and many say unfairly) bruised in the process, becoming a scapegoat for Congress and others.

• Blame continues with many in Congress (Democrats and Republicans alike) calling for Tim Geithner’s removal as Treasury Secretary, but Geithner coming on strong defending his actions. Many wonder if Congress is looking for scapegoats to avoid self blame.

• Things remain unsettled in Washington and in the markets since the Republican Brown’s Massachusetts Senate win. Blame, finger pointing and a complete loss of focus in Washington seems to have placed everything into question. Frankly, I am amazed at the continuing impact of this election.

Now on to IR news from SEC:

• The SEC approved interpretive guidance on climate change disclosure providing more information on existing corporate disclosure requirements related to a “material risk” for companies. The yet to be issued release will go into more depth on expected climate disclosure related to:

      > The legislative impact of existing climate change laws to your company,
      > International accords and treaty impact as it relates to climate change,
      > Indirect business trends or consequences related to climate change, and
      > Physical impact of climate change on your business.

Last week Washington and politics showed their influence on the markets. The impact began with the win by Massachusetts Republican Brown for the late Ted Kennedy’s Senate seat, shocking all who follow politics. The resulting loss of the Democratic supermajority in the Senate forces a bit more Republican input into upcoming legislation. Things seemed to completely unravel as the week progressed after President Obama announced a proposal that would prohibit banks from taking ownership in proprietary trading, private equity and hedge funds. Without any definition of these items, many wondered if this was a political move due to the Democratic loss in Massachusetts, and whether this could eliminate key risk management abilities for bank clients. While this discussion will take months of debate, other things in Washington are more certain.

President Obama will deliver his State of the Union speech tomorrow, and it will give some indication of his priorities. Though his Senate confirmation is uncertain (although I still believe very likely) with many in Washington politicking on both sides, Ben Bernanke’s continuing status as Federal Reserve Chairman should be determined late this week. What does seem certain is that Treasury Secretary Tim Geithner is currently being marginalized while the voice of Obama advisor, and former Federal Reserve Chair Paul Volcker, is increasing. Geithner’s moderate views are being pushed aside for a more aggressive stance on reform. Some have said this policy change has a direct correlation with Brown’s win in Massachusetts. Regardless, markets don’t like uncertainty and this past week we all saw the impact of Washington on a fragile financial market.

Some items with a more immediate IR focus include:

• The SEC will meet tomorrow and one of the agenda items is to “consider a recommendation to publish an interpretive release to provide guidance to public companies regarding the Commission's current disclosure requirements concerning matters relating to climate change.” NIRI will bring you more information as this discussion develops.

• According to the Wall Street Journal, RiskMetrics Group Inc. has put the company on the auction block. Rumors are that Bloomberg and Thomson Reuters are among those interested. I have to wonder whether current SEC analysis of proxy advisory services plays a role in this decision by the seller and also by potential buyers.

• Rumors have been circulating that the SEC will implement an alternative uptick rule in February. Reports indicate the alternative uptick rule would require trades to be executed above the best existing bid when shares fall 10% in a day.

• Barney Frank held hearings last week on executive compensation for the financial services industry. If you get questions from investors on your executive compensation plan, I suggest your review the testimony of Nell Minow with The Corporate Library to see where the fingers are being pointed on current compensation practices.

• The Supreme Court made a ruling last week that now allows companies, labor unions and other organized interest groups to spend unlimited sums on political advertising. I would not be surprised to see Congress discuss trying to increase more disclosure of political spending for companies or even move this to a proxy vote for company shareholders in the near future.

In NIRI news, if you missed the webinar last week on the new SEC disclosure requirements that go into effect February 28, I encourage you to listen to the replay at your leisure. Finally, I appreciate all of you who are participating in the recently launched NIRI eGroups. This is a great way to communicate with other members and share practices and information – join in today!

Until next week,

Jeff Morgan, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

Today all interested in politics, as well as most in Washington, turn their eyes north to Massachusetts and the outcome of the special election to replace the recently deceased Senator Ted Kennedy. Though it once seemed like an easy victory for the Democratic candidate, everyone is now holding their breath to see if the critical 60 seat Democratic majority will be maintained in the Senate. Without this 60th vote, issues like health care and financial reform may undergo significant changes as the Republicans would break the veto-proof Democratic “supermajority” and some bipartisanship would have to occur.

Speaking of bipartisanship, it appears Senate Banking Chair Dodd is considering conceding some parts of the Senate financial reform, (such as the Consumer Financial Protection Agency), in order to win support of Republicans and conservative Democrats for other changes. This bill will be released in the next few weeks and I will be watching for portions that might affect IR and corporate governance. Reform proposals like say-on-pay, proxy access and majority voting are the ones I think are most likely to make it into the discussion.

Activities get into full motion today in Washington as Congress and Senate are now in session, back from the holiday recess. Unlike our elected officials, regulators returned to work like all of us, just after the New Years holiday, and were very busy last week. Here are some of their activities:

The SEC released updated interpretive guidance on the use of non-GAAP financial measures, and I recommend reading and understanding this new information. These C&DI’s consist of 32 questions and answers covering topics including: business combinations, nonrecurring charges and limits of use of “free cash flow” information, among other things.

- The SEC proposed a rule on “naked access” to markets that ultimately prohibit high frequency traders and others from avoiding risk management controls and supervision. While this doesn’t directly affect IR professionals, reports indicate that somewhere between 38 and 50 percent of daily equity volume comes from naked access accounts. On the surface, the proposed additional safeguards seem to make good sense.

- In the area of enforcement, the SEC announced guidelines for those who cooperate and provide information to the SEC. These guidelines, which include provisions for immunity and leniency, will allow the SEC to pursue cases with new abilities and tools similar to those available to the Justice Department.

- The SEC also announced a concept release on market structure. Similar to a discussion paper, the full release is an excellent primer on some of the challenges in our financial market structure. I found some of the market activity data particularly interesting. For instance, here is the September 2009 estimated volume by trading center:

Greetings from California, where I am attending NIRI’s “Introduction to IR,” as well as speaking to three NIRI California chapters this week. I am also stopping by our Annual Conference hotel, the Manchester Grand Hyatt, in San Diego to discuss June Conference plans. It is not too early to start making your plans for this annual NIRI event. With the two-for-one hotel night offer for those arriving pre-conference on Friday night (and receiving Saturday night free), we are seeing many members sign up for early bird registration to save even more money and maximize budget dollars. Now on to Washington news …

Although Congress did not return to session until today, and the Senate remains out until the 19th, Washington was busy last week with President Obama’s return from his holiday. The primary newsmaker in Washington was national security in the wake of the Christmas Day airline bombing attempt. However, other financially-related news made it feel like things were returning to normal.

First was the announcement by Senate Banking Chairman Chris Dodd that he will not seek reelection in the fall. Several other politicians made similar announcements, and a number of interesting conversations have developed as a result. One conversation is related to the difficulty Democrats now face in keeping their Senate majority. However, in reference to Dodd specifically, the conversation has been how this announcement might affect the financial reform he is spearheading in the Senate. Some suggest that his reform efforts can now be much more aggressive since he isn’t concerned about political contributions. Others suggest that he will not want to rock the boat as it is difficult for a lame duck to do much, especially someone who might end up going into private business. I tend to side with those in the second mindset and believe he will continue to try to get a bi-partisan bill through the Senate Banking Committee to the full Senate. My guess is he would rather go out with this accomplishment versus risking a prolonged and damaging debate as happened with healthcare. However, whether it is boom or bust for extensive financial reform chances, we will have to wait a few more weeks.

Last week, I mentioned my hope for a release this month of an SEC concept paper or discussion draft on improved shareholder communications or proxy mechanics. After I made that statement, the SEC did announce a concept paper release, and though I was right on a release, I was ultimately wrong on the subject. Tomorrow the SEC will indeed release a concept paper, but the topic will be market structure and not proxy mechanics. This will still be of interest to IR professionals as it will discuss conceptual changes regarding market trading and structure, including high frequency trading and direct access. I will be discussing some of the impact of this SEC thought piece for IR in the coming weeks. As for the concept release on proxy mechanics, I am told we have to wait a few more months.

I am also hearing, and of much interest to IR professionals, that the long awaited decision on additional short selling measures in the form of a tick test or circuit breaker could be announced as soon as later this month. It will be interesting to see the final decision, as well as the logic for the decision. Everyone in IR is hoping for some indication of a movement towards more short selling disclosure in the future as well. More on this as it develops in the coming weeks.

Now I want to make you aware of a troubling matter that I learned of yesterday. The SEC filed settled insider trading charges yesterday against a NIRI member for using material non-public information for personal gain. This morning I spoke with this individual and accepted his resignation from NIRI, and I am pleased that he recognized his violation of the NIRI Code of Ethics. This incident provides a good reminder that as a condition of membership, every NIRI member agrees to this stringent Code which is grounded in the highest standards of integrity and ethical behavior – our profession demands no less. NIRI has due process for ethics-related matters that involves the NIRI Ethics Council and the NIRI Board of Directors. NIRI tolerates no deviations from our Ethics Code, and although we have had very few membership terminations resulting from ethics violations, NIRI will not hesitate to take this action if warranted.

Finally this week, I want to bring your attention a very important upcoming member webinar. Last month the SEC announced new disclosures related to directors, compensation, risk and voting results. Next Tuesday we will host a webinar to talk about these changes as well as how IR is evolving to meet the challenges through increased involvement in the proxy process. If you can’t attend the live event, it will be available to members in archival form. Register now and plan to attend.

Until next week,

Jeff Morgan, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

January is upon us and so is the start of 2010. I hope everyone had a wonderful holiday and is starting the New Year in good health and spirit. Since we have turned the calendar to a “10,” many are looking at the past decade in retrospect. Much is being made, and rightfully so, about the lack of U.S. economic growth and how we have slipped backwards during the past ten years. This Washington Post article provides a good summary including anemic economic output and net zero job creation. Brad Wilks’ (NIRI Chairman) upcoming January IR Update column discusses the impact on investor relations and highlights unique IR challenges created by these times.

As we look forward to the next ten years, I am hopeful that we (politicians, regulators, companies and individuals) have all learned lessons and will be smarter in the future. With that though in mind, let us review what is likely to happen over the next few weeks in Washington.

The House returns on January 12 and the Senate on January 19. The President’s State of the Union speech is not yet scheduled but usually occurs between January 19th and January 31st. I suspect the administration is considering the best date based upon several factors that include three near the top of the list:

1. Distancing the administration from any political fallout due to the botched December 25th terrorist attack.
2. Following the developments during the Congressional recess on health care reform as the Senate and House negotiate toward a compromise bill.
3. Monitoring how quickly Senate Banking Chairman Dodd can put forward a bi-partisan financial reform bill.

The President wants to be sure he can put his presidency and the administration in the best light possible in order to jump start mid-term elections for the Democratic Party. This is a critical election year as on November 2, elections will be held for all 435 House of Representative seats and 36 (or about one third) of the Senate seats. There is no doubt these elections are critical to the Obama presidency and will also be in the minds of Congress as they make decisions during 2010. The tendency is to be more moderate and not “rock the boat” when up for re-election.

As we look to the SEC, I expect several items relevant to IR over the next few weeks:

1. A focus by the SEC on retail education regarding the change to NYSE Rule 452 making the broker vote non-routine. Companies should also look for opportunities to educate retail shareholders. Together with several other groups, NIRI has developed standardized educational language that we have proposed to the SEC for public use.
2. I expect the SEC to approve changes to Notice and Access or e-proxy (Amendments to Rules Requiring Availability of Proxy Materials) very soon. NIRI submitted comments to the SEC in favor of these changes.
3. The SEC is also expected to release a concept paper or discussion draft soon identifying problems and suggesting changing in proxy mechanics. NIRI has been working hard on this effort as a member of the Shareholder Communications Coalition, and looks forward to the release.

I think it is very possible that the SEC may release some or all of these items before staff heads to the annual Securities Regulation Institute event where many SEC staff will speak. I think it is unlikely that other items, like proxy access and short selling circuit breakers, will be announced this month.

To conclude, I want to point out a couple NIRI-related items that may be of interest:

1. It is not too late to attend NIRI’s Intro to Investor Relations on January 10-13. There are a couple of slots left so don’t delay and register today. If you are planning to attend, I look forward to meeting you there.
2. There has been a terrific conversation thread in the NIRI LinkedIn group started by a member asking “Would you consider simply posting the prepared remarks for a quarterly report and allocate conference call time to just Q&A?”
3. Speaking of online networking, NIRI will launch our new social networking eGroups Communities on the NIRI website next Tuesday, January 12th. We will conduct a webinar that day at 4 PM Eastern Time to review the features and use of this powerful member-only benefit. This next generation robust online community has features beyond what LinkedIn can offer and will allow members to join communities that are customized to your interests.

Until next week,

Jeff Morgan, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

As the year draws to a close, I find myself at my last message for 2009. In retrospect, it has been a challenging year for almost everyone. The majority of us are “recession fatigued” and looking forward to and hoping for a brighter 2010. I personally write these weekly messages about what is going on in Washington and in the IR space, and last week I reflected on what I believed to be the chart topping items for 2009.

This week, I want to look forward and share with you a message from my friend Marshall Brown, who is a certified career and executive counselor. So many of us feel like we are doing three jobs, trying to keep our heads above water during these challenge economic times, and struggling with smaller budgets. However, no matter your situation, there are times we all must step back, take a breath of fresh air and look at things from a different perspective. For most of us, this is the time of year to reflect and set a path for a better tomorrow.

With this thought in mind, here is the list given to me by Marshall for a healthier and more positive 2010.

Top Ways to Start (and Maintain) a “10” in 2010!  By Marshall Brown at Marshall Brown & Associates.

The best way to have a good year is by living life on a daily basis, letting the good days accumulate, one by one. And it doesn’t have to be New Year’s to resolve to have a good year. Start anytime. Today, for instance:

1. Take time, slow down. Be present in your life and mindful of the present.
2. Care for your body, eat well, exercise, treat yourself to loving, nurturing self-care.
3. Spend quality time with family and friends. Communicate, keep in touch. Say I love you.
4. Tell people you appreciate them.
5. Take time throughout the day to renew yourself. Take a walk, read a poem or a good book, listen to music (really listen); bring beauty into your life. On a monthly basis, take a whole day for yourself — play, treat yourself to something you want to do; retreat from your daily life. Mark these special days on your calendar (in ink) so you’ll be certain to take them.
6. Clean up what needs to be cleaned up. Make amends, fix what’s broken, clear away clutter, forgive what needs to be forgiven and let go.
7. Commit to a project you really want to do or to learning something new or attaining something you want. Commitment is the first step. Then set achievable goals and work toward them on a daily basis.
8. Give yourself to a cause, volunteer at a nonprofit organization, a community group, your church or lend a hand to an individual or family who could use your help.
9. Practice your spirituality in whatever form you express it, on a daily basis. 10. Laugh every day.
11. Take time to dream.

In the spirit of living life a bit better and shaking off some of the fatigue most of us feel, I hope you find these points to be a good reminder and will give you nudge. I sure did. I want to thank you for your membership in NIRI. I also want to thank those of you who choose NIRI to be your place of volunteer service. I know the chapters would welcome more volunteers, so if you feel like getting involved, the doors are open to you. From my NIRI family – the NIRI staff – to you and your family, I want to wish you all the best for a “10” in 2010!

Happy New Year!

Until next week,

Jeff Morgan, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

Snow is not uncommon in D.C., but snow in excess of 12 inches from one storm is very unusual. The storm over this past weekend delivered up to 22 inches of snow, making it the largest December snowstorm in D.C.’s history. Congress working late into the evening and on weekends is almost as unusual. During the past few weeks, the Senate has been working all hours, including through a crippling snowstorm, to reach agreement on a healthcare bill before the holiday recess, creating a very rare sight in Washington. It appears they have been successful, and the Senate will vote on Christmas Eve on healthcare reform. The real challenge will be reconciling the House and Senate bills in early 2010. However, for IR professionals, the healthcare debate keeps financial reform legislation on a much slower track in Congress and I, for one, am fine with that.

This morning, NIRI members received an Executive Alert regarding the SEC’s new Proxy Disclosure Enhancements rules. I urge all IR professionals to read and understand these new SEC rules and to be part of the discussion in your organization on the impact and implementation of these changes. As a critical touch point for investors, you should be prepared to answer questions about these new disclosures. NIRI’s Executive Alert will help you find the critical pages from the 129 page document and make your reading easier.

Since we are approaching the end of the year, I wanted to share with you a bit of personal reflection as I review my columns from the past year and pick the top stories for 2009. Here are my picks, in no order:

1. The recession and the impact on IR.
2. The SEC approves change to NYSE Rule 452 making director elections non-routine in all public companies.
3. NIRI and the Shareholder Communications Coalition are successful as the SEC agrees to evaluate overhauling proxy mechanics.
4. Social media expands as IR professionals move slowly forward integrating these new communication mediums into their IR toolkit.
5. The SEC approves new proxy disclosure enhancement rules.
6. The SEC moves to eliminate naked or abusive short selling by approving changes to Reg SHO as NIRI and others submit comments.
7. The SEC proposes changes to transparency for darkpools and other alternative trading systems.
8. NIRI celebrates our 40th anniversary of serving the IR profession.
9. The SEC moves to make changes to Notice and Access rules after much urging by many groups, including NIRI.
10. Congress and the Obama administration pursue financial oversight reform, including corporate governance changes such as proxy access.
11. The SEC reacts to the Madoff scandal by overhauling its enforcement area and increasing enforcement actions.
12. SEC provides additional Reg FD Compliance and Disclosure Interpretations.
13. NIRI Board meets with SEC to discuss, among other things, ownership transparency.
Forward-looking guidance practices continue to be a focus in 2009.

The list reminds me how important NIRI is in serving as your advocate on behalf of the IR profession in Washington and beyond. As I close for this week, on behalf of the Board and staff at NIRI, we want wish everyone a joyous holiday season!

Greetings from the NIRI Houston Chapter, where I am making my last chapter visit for 2009. This past week has been a busy one so let’s get right to the Washington update:

- Last Friday, Congress approved a 1,279 page financial reform bill with no Republicans voting in favor and twenty-seven Democrats voting against passage. The real battle for financial reform, however, will be in the Senate, and its proposed legislation will likely look very different from the House bill. The House bill creates the CFPA (Consumer Financial Protection Agency), imposes restrictions on derivatives, allows the federal government to dissolve faltering financial firms and requires payment of $150 billion from other financial firms to establish a fund for the government to closeout these faltering competitors. The bill also establishes a systemic risk council and allows the Government Accountability Office to audit the Federal Reserve, as well as increases resources for the SEC, including national subpoena power. It also includes provisions concerning corporate governance (i.e. executive compensation), investor protection and hedge fund regulation. The Senate bill, which also contains corporate governance provisions (as currently drafted and in Committee), will not likely come up for a full vote until at least March, and more likely in the April-May timeframe. While I believe Congress will hail passage of “financial reform” in 2010, the battle is far from over and it will likely be summer before we really get any idea of the impact to companies and investor relations professionals.

- However, the SEC will address proposed rules tomorrow that will have a direct impact on investor relations. The focus of the new rules will be on compensation policies, director and director nominee qualifications, board governance structure disclosure, compensation consultants and risk. Note too, though, the Commission announced yesterday that it is reopening the comment period on its controversial proxy access proposal, in order to “seek views on additional data and related analyses received” after the comment period closed. I suspect this may be partially driven by a desire to see if Congress gives the SEC additional authority in these areas. In any event, I am hearing this makes it unlikely that any action on the proposal will now happen before March. Stay tuned for more information – IROs must understand these new rules as investors and the press will certainly be scrutinizing and asking questions about the new disclosures.

- Last week the SEC released its “Select SEC and Market Data Fiscal 2009” report that is full of enforcement statistics and case data. The report shows issuer reporting and disclosure enforcement made up 22% of all actions – the highest category reported. Sixty eight were civil actions and 75 administrative proceedings. The majority of investor complaints were about redemption, liquidation or account closing problems, followed by short selling complaints and theft of funds.

- With all the talk of social media and online communities, I thought you might find it interesting that the self regulatory body for those involved in selling derivatives proposed business conduct rules for some online activities by employees. Among other things it says, “Members should have policies regarding employee conduct. These policies could require employees to notify the employer if they participate in any on-line trading or financial communities and provide screen names so that the employer can monitor employees’ posts periodically. Alternatively, the policy could simply prohibit participation in such communities. The Member must, of course, take reasonable steps to enforce whatever policies it adopts.” It seems to me it would make sense for these same disclosures to be made by many more involved in the markets and for employers to know and take responsibility for those employees involved in equity trading. This might also add to the SEC’s enforcement case load.

- If you have not already reviewed moxyvote.com, I encourage you to take a look. This website invites dissident shareholders to recruit individual investors for proxy fights. Advocates post their position and then recruit individual shareholders to support the position. We will see if this has staying power, but certainly you should be aware of this new web-based shareholder tool.

Finally, for those who might be interested and did not listen to the NIRI annual meeting webcast, comments by NIRI’s former chair, Bina Thompson, and myself have been posted on the NIRI website.

Until next week,

Jeff Morgan, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

As the 2009 begins to wind down, I am traveling to St. Louis for one of my last two chapter visits of the year. I look forward to sitting down with St. Louis chapter members to discuss NIRI, what is happening in Washington, the state of investor relations, and my thoughts on IR in 2010.

Last week was the annual gathering of the NIRI Senior Roundtable. If you are the senior IR practitioner in your company and have 10 or more years of IR experience, I suggest you consider joining now as we expand our offerings in 2010 to provide even greater year-round value for our senior practitioners. Some of the “nuggets” I got from the two day NYSE-Euronext sponsored event included:

- IROs must pay attention to continuing regulatory changes. Given our unique roll with investors, IR needs to be part of the internal proxy process discussion and understand corporate governance issues particularly considering the profound effect recent regulatory changes will likely have on the 2010 proxy season.

- Don’t underestimate the power of your website as an information avenue for potential investors who use the entire breadth of information available to evaluate your organization. Don’t overlook opportunities to discuss your company’s relative position in your sector, as well as the macro outlook on the sector.

- Short-term stock trading has gone from 15-20% to 60-70% of the market over the last decade (this is no surprise to many). In addition, market structure continues to evolve, so IR must work harder and smarter to understand market activity.

- Given this increased churn, being “long” could mean holding for weeks, days or even hours as investors focus on a price target rather than timeframe.

- Enforcement actions will continue in 2010 and companies need to be vigilant to ensure they have active compliance programs. I think everyone expects some interesting cases in 2010. Companies should focus on how confidential information might be inadvertently provided to those outside the company. Mentioned as sources of potential information leaks were expert networks, as well as peer-to-peer networks where executives have open discussions among “trusted” peers.

- Social media is evolving but is here to stay. Just as IR evolved to use e-mail and the web, it must also do so with social media. Social media has many uses in companies including e-commerce, information gathering, online conversations and information dissemination. IR must be a corporate champion of social media as it relates to investors, and strategies like repurposing information and using social media to create a “larger microphone” for pushing out information (compliant with SEC and exchange rules) represent an easy way to begin.

As we begin looking forward to 2010, I want to mention NIRI’s semi-annual “Introduction to Investor Relations ” seminar in Santa Monica, California on January 10-13, 2010. If you are new to IR, you will find that this must-attend event has become a “right of passage” for those new to the profession. Attendees are immersed in all aspects of investor relations, begin to build a critical network of peers, and have the opportunity to visit with important service providers to the profession. The sessions are taught by senior IR professionals who share their wisdom and also often serve as a long-term contact for your questions after the event. Check it out!

I also want to mention NIRI’s 2010 Annual Conference (June 6-9, 2010 in San Diego), THE critical event for IR professionals to attend, typically drawing about one third of NIRI members. The IR profession is experiencing change from all sides including regulatory, corporate transparency, communication methods, buy and sell-side, and time management pressures. The conference helps you to get up to speed to manage this change. To allow for you to manage your expenses better in the current economic climate, we have opened registration to allow you to register now with 2009 travel dollars. Our partner hotel is also offering some great deals including free room nights to attendees based upon your arrival and departure.

Finally, it is with great sadness that I share with you news of the recent passing of NIRI member and Vice President of IR for Avon Products, Renee Johansen. Renee was a member of the NIRI Senior Roundtable and Steering Committee, and in fact, many of us enjoyed her company at last week's Roundtable in San Francisco. We are all clearly stunned by this news. We learned from the company that her death on Sunday was sudden and unexpected and the cause has not yet been determined. NIRI will pass along charitable desires of family as soon as we learn of their wishes. As many of you know, Renee was a great colleague, loving mother, wife and wonderful friend. She will be truly missed.

Until next week,

Jeff Morgan, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

Today we hold NIRI's annual meeting at 12:00 noon Pacific Time in San Francisco, and we transition to a new NIRI National Board. I’d like to begin my message this week by thanking Bina Thompson for her service as Chair of the NIRI Board. Bina has been an outstanding Chairperson for the organization and has been extremely helpful to me over the past two years as I became your CEO. I also want to thank Beth Saunders, Blair Christie, and Catherine Mathis as they complete their term on the Board. Each has done excellent work on your behalf to help grow and evolve NIRI to serve you better. I would also like to welcome Brad Wilks as NIRI’s new Chairperson, along with new Board members Hulus Alpay, Mary Beth Kissane, Andy Kramer and Michelle Levine Schwartz. I look forward to working with them as they continue the long-standing tradition of NIRI Board excellence.

Today marks the first of December and I'd like to prepare you for what I expect will be a busy few weeks at the SEC. Here are several items I expect the SEC to announce:

• Proxy Disclosure and Solicitation Enhancements – proposed in July and will be approved for the 2010 proxy season. It is likely that some of the proposal (solicitation enhancement) will be dropped from this final rule and dealt with later in 2010.
• Amendments to Regulation SHO – short selling uptick and/or circuit breaker rule, proposed in mid-August. The SEC has struggled with what to do here as abusive short selling has declined dramatically. A logical path for the SEC might be to implement some type of circuit breaker to slow down short selling during times of heavy market volatility when the three day period (T+3) for settlement might create a situation ripe for potential short selling abuse. I would not be surprised if this takes a few more months of SEC discussion.
• Amendments to Rules Requiring Availability of Proxy Materials – proposed in mid October and will likely gain quick approval in time for the 2010 proxy season.

• Pre-trade transparency. The SEC has proposed reducing the ATS order display threshold, and that "actionable IOIs" be defined as firm orders or quotes, subject to the same display rules as other types or orders. This is related to who can see an indication of interest before the trade actually happens. In certain cases, pre-trade transparency is to the detriment of institutions or investors if traders front run these orders, affecting market price for the ultimate order and possibly even driving out legitimate long term investors. For this reason, the SEC has proposed an exclusion for large block trades (> $200K) to protect order anonymity. The lack of transparency limits the market impact costs associated with this block trade information leakage.
  
  Enabling institutional investors to trade a large block efficiently is important for all issuers. It's especially important for small and mid cap stocks that are typically less liquid and therefore more difficult to trade without moving the market. While this proposal appears to make sense for large block trading, the challenge for the SEC will be creating certainty that long term investors are not disadvantaged by market trading and front running at any level.
  
  
• Post-trade transparency. On the other hand, post-trade transparency is the focus of so many IROs as they struggle to figure out who is trading and who owns their stock. The SEC has proposed that the trades now be attributed to the actual ATS where the trade was executed (again, subject to a $200K exemption). So, for issuers, this information would be an improvement by creating parity with exchange information. However, understand that most ATSs have hundreds of institutions trading through them, so this proposal will not help identify the shareholder, just the ATS.

As we approach Thanksgiving and the official beginning of the holiday season, our thoughts turn to friends and family. Holiday shopping begins in earnest and will be watched closely as a critical indicator of the psyche of consumers, as well as an indication of the overall health of markets. As we approach this festive, yet market-critical time, I want to provide an update on just a few things.

I spoke at an XBRL US national conference last week on the subject of XBRL and investor communication. For those that are interested, my perception of XBRL from an IR point of view is that we have yet to see the benefits promised for issuers. This may change with increased adoption, but for now I think few issuers are reaping benefits.

Last week NIRI also submitted a comment letter to the SEC on the proposed Notice and Access amendment. We urged immediate approval of the proposed changes for use in the 2010 proxy system. We also recommended the SEC consider changing the 40 day notice requirement to 30 days as this item has been problematic for some issuers. Finally, we suggested the SEC expand its educational efforts beyond the proposed Notice and Access education to a more comprehensive retail shareholder education program.

Earlier this month, NASDAQ filed a disclosure-related rule change that, according to the SEC filing, will become operative on December 7. This is a modification to their pre-notification rule that now mandates companies contact NASDAQ 10 minutes prior to issuing material news. The prior language simply required advance notification, and this 10 minute pre-notification is now consistent with the NYSE Listed Company Manual. Additionally, NASDAQ modified the language regarding disclosure methods in order to bring it in line with the SEC’s guidance for the use of company websites.

For those with institutional investors in the U.K., NIRI’s U.K. counterpart, the Investor Relations Society, shared with me a newly agreed upon code of conduct for institutional investors (pensions, insurance companies and investment trusts) to enhance the quality of dialogue between institutional investors and issuers. This code was developed by the organizations representing institutional holders and is meant to improve shareholder returns, corporate governance, and reduce risk. The seven principles:

1. Institutional investors should publicly disclose their policy on how they will discharge their stewardship responsibilities

2. Institutional investors should have a robust policy on managing conflicts of interest in relation to stewardship and this policy should be publicly disclosed

3. Institutional investors should monitor their investee companies

4. Institutional investors should establish clear guidelines on when and how they will escalate their activities as a method of protecting and enhancing shareholder value

5. Institutional investors should be willing to act collectively with other investors where appropriate

6. Institutional investors should have a clear policy on voting and disclosure of voting activity

7. Institutional investors should report periodically on their stewardship and voting activities

Good afternoon from New York, where I will moderate a panel this evening at a NIRI NY Chapter program with former SEC Chairman Harvey Pitt. I look forward to Mr. Pitt’s insight and a healthy dialogue with NIRI members. I understand the program will be attended by a delegation from China, sponsored by the Asia Pacific Investor Relations Association, that is spending time in the U.S. to learn more about investor relations. They will visit with NIRI members over the next several days and attend a NIRI chapter event that should really be a highlight of their IR immersion. Tomorrow morning, I’ll give a keynote presentation to the XBRL.US Annual Conference with my assessment the current state of XBRL use from an issuer perspective. I will share that with you in next week’s column. If you plan to attend the XBRL Conference, please stop by the NIRI booth and say hello.

In Washington last week, Senator Dodd released his 1,136 page regulatory reform proposal for the Senate Banking Committee to digest and debate over the coming months. News coverage centered on the proposal’s sweeping reform of existing financial regulatory architecture and reduction in some Federal Reserve powers, while also giving the Fed huge discretionary power to manage bank failures.

However, the mainstream news media did not focus on the corporate reforms buried in the proposal. These reforms include: federally mandated, non-binding, annual say-on-pay voting; compensation committee independence; clawbacks due to accounting restatements; additional proxy disclosure; majority voting; federally mandated proxy access; elimination of staggered boards; and disclosure of rationale for chairman selection and Chairman/CEO structure. Wow! Essentially everything, including the kitchen sink, is in this proposal that has been discussed as a possible corporate governance reform for much of 2009. This bill is much different from the Barney Frank’s House bill, so I expect that the Senate bill will change a lot before it comes out of Committee, and then again before the Senate votes on it. You can be sure it will get a great deal of news attention as hearings begin.

You have heard me say it before, but with mid-year elections looming and Senator Dodd under a great deal of pressure in his own re-election bid, there is much speculation about the level of support for many of the bill’s provisions considering that they are politically charged and different from the Obama administration’s recommendations. Only this past week, a Pew Research Center study showed a great deal of anti-incumbent sentiment among voters, with 53% of voters not wanting to see most members of Congress return to office next year, but almost the same percentage believe their own representative should be re-elected. If the growing mood among voters towards Congress continues, it may turn voters against their own elected officials and cause Congress to not want to “rock the boat” leading into election season next year. While I do believe we will see some new legislation that Washington will hail as “financial reform” in 2010, I am not convinced it will have the kind of teeth that the Dodd bill (Restoring Financial Stability Act of 2009) proposes. My bet continues to be on the SEC and their focus in 2010 as having the biggest impact on IR. A couple of weeks ago I mentioned SEC proposed changes to darkpools, including an increase in pre- and post-trade transparency. The proposal, released by the SEC last Friday, provides for a 90 day comment period. NIRI plans to comment in early 2010. This week we will file a comment letter on the SEC’s proposed Notice & Access amendment, and I will share that comment letter with you next week.

Until next week,

Jeff Morgan, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

I began last week’s message with a quote by SEC Commissioner Paredes about changes to disclosure, but noted that I was disappointed after realizing his comments were related to his concern about additional short sale disclosure. This week, SEC Chair Schapiro has renewed my sense of hope by making this statement, “Finally, in the coming year, we expect to begin a comprehensive review of our line item disclosure requirements for companies in their quarterly and annual filings. Our goal is to determine if some information we already require should be omitted — and if some information we don't require should be added. Again, our efforts will be targeted at making sure that investors are receiving the right information, and not just more information.” Needless to say this is a huge effort and one that I certainly applaud as something that is needed.

My comment last week also prompted contact by University of Michigan Accounting Professor Reuven Lehavy, who is one of the faculty members of the summer NIRI / Michigan IR certificate program, Theory and Practice of Investor Relations. I pass along his research on “The Effect of Annual Report Readability on Analyst Following and the Properties of Their Earnings Forecasts.” This paper focuses on the linguistic complexity of written communication on the behavior of sell-side analysts using 10-K filings and how it affects their earnings forecast accuracy. The report finds that communication complexity reduces earnings forecast accuracy.

Chairman Schapiro’s earlier quote is from a speech last week to the Practising Law Institute that I urge you to read. It is a concise presentation by the person who controls the SEC’s agenda on how she believes these issues fit together and why they are critical. NIRI has been advocating on your behalf on the majority of these issues, and I think you will agree that our advocacy efforts are important at this time of heightened regulatory change.

Speaking of changing regulation, you may have read that the House Financial Services Committee passed the “Investor Protection Act – H.R. 3817” with a couple of contentious inclusions. In summary, the bill looks to tighten bank and capital market regulation while doubling the budget of the SEC and giving the agency new powers, including the authority to implement proxy access or mandate corporate shareholder nominated director requirements. The bill also includes a provision, pushed by NASDAQ and others, to provide relief to smaller issuers for SOX 404(b) compliance by exempting those with a market cap of less than $75 million.

So what happens now? The bill will go to the full House for a vote likely to happen in early December. However, what happens in the Senate remains to be seen. Senator Chris Dodd, who likely feels even more political pressure after observing state election results last week, is planning to turn the focus of the Senate Banking Committee into broader financial overhaul. It will be interesting to watch this play out in the Senate, as this may create further delays in the ultimate passage of any financial reform legislation. Those delays continue to trouble members in Congress and the Senate who are concerned about their 2010 re-election campaigns. Political pundits predict, and I tend to agree, that the longer health care and financial services reform takes, the more muted or toned down any actual legislation will be. The analysis from mid-term elections seems to point to a belief that incumbent Democrats and Republicans are vulnerable if voters believe they are not doing the best job possible. Additionally, independents have a very strong voice in elections and tend to vote with their beliefs. The focus on 2010 elections is likely to have an important effect on the legislative agenda for Congress in 2010.

Until next week,

Jeff Morgan, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

In a recent speech about disclosure, SEC Commissioner Troy Paredes said, “Ironically, if investors are overloaded, more disclosure actually can result in less transparency and worse decisions.” For IR professionals there are times we have all internally felt this way, as we have watched disclosures in the Q and K (and proxy statements) grow in length and repetition over the years. It was only a few weeks ago that a senior SEC staffer told me that it was the Commission’s ultimate desire for companies to disclose a piece of information once and reduce the complexity to a more easily understood format. I applaud that effort and was heartened when I thought Commissioner Paredes’ statement was in reference to the same desire. Unfortunately, the example he used was not about company disclosure, but about public disclosure of short sales or short positions, and how such disclosure could compromise proprietary trading strategies. Wow, was I disappointed as this is something all IR professionals would love to know for their companies. It is also an item NIRI is advocating for on behalf of companies and investors (rather than the traders of Commissioner Parades’ example). Comments like this provide a good grounding and a reminder of the continuing need for NIRI to educate and inform regulators and legislators.

Speaking of education, for the last several months I have been providing you with weekly updates of the most IR-relevant activities in Washington. Next Tuesday (Nov. 10 at 4:00 pm Eastern time), I will lead a member benefit webinar with Paul Schulman, Executive Managing Director of the Altman Group. I will give you a summary of where things stand in Washington and then Paul will offer some practical thoughts on how your company’s relationship with investors is even more critical and how you might begin preparing for the 2010 proxy season. I hope to leave plenty of time for questions, so please join me for this interactive discussion.

Continuing on the topic of education, many of the changes in Washington that I have been speaking about are directly related to the evolution of our capital markets. Over the past 18 months, NIRI has presented various capital markets seminars with the desire to help you better understand these changes. Based upon your evaluations and comments, we have fundamentally redesigned our capital markets seminar, and now offer The New Capital Markets seminar on December 9, 2009 at the Liquidnet headquarters office in New York City. The three major pillars of this new session include: trading, research and equity capital markets. I hope you will attend, and suggest registering early as space is limited.

As my theme today seems to be education, our Annual Conference Committee is seeking CEOs and CFOs who are former IROs for speaking opportunities at the 2010 NIRI Annual Conference in San Diego. Please contact Kraig Conrad if you or someone you know may be interested in presenting at the largest IR event in the world. And yes, registration for the 2010 annual conference is available now for those of you interested in registering early. I should also mention there is the potential to get a free night’s stay in San Diego depending upon your arrival and departure. Consider this a personal reward for all your hard work in this challenging economy!

At the time this IR Weekly arrives in your inbox today, I will be attending the NIRI Connecticut / Westchester Chapter meeting featuring former SEC Chairman Harvey Pitt. I am also pleased to be serving as Moderator for a NIRI NY Chapter event with Harvey Pitt on November 17, 2009. I look forward to seeing some of you at either of these events as I expect Mr. Pitt will be very forthcoming with his opinion of the actions now being considered by the SEC.

Until next week,

Jeff Morgan, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

This week I want to start with an issue that you have no doubt read about in the news - the insider trading accusations at Galleon. In case you are not aware, it appears that an employee of an IR firm was involved in this SEC insider trading case. Thomson Reuters provides good background on the matter. The IR-related individual identified is not a NIRI member, and has never been a member. While this person has never agreed to NIRI’s Code of Ethics, the case raises some important issues for all IR professionals. What is your corporate or counselor policy regarding business confidentiality? In this case, the employee is reported to have been blogging about client companies or competitors in violation of a company agreement. While not implicated here, another troubling parallel situation could be an employee participating in “expert” consultancies like GLG (Gerson Lehrman Group). Are situations like this part of your compliance program? My sources tell me this may be the tip of the iceberg for other legal actions forthcoming, so please be sure your compliance program is up to date and reviewed regularly. When you join NIRI, every member agrees to abide by the organization’s Code of Ethics and that means you agree to be professional and adhere to fundamental principals of integrity, the highest legal and ethical standards and information confidentiality. Your membership also gives you the ability to tap into our Ethics Council of senior member peers for advice. Please don’t hesitate to use this valuable benefit.

Last week I discussed an SEC proposal that NIRI advocated for to update Notice & Access regulation. While not wanting to sound like Santa Claus, this week I am happy to report on another SEC proposal relating to a second issue NIRI has advocated for on behalf of companies and IR professionals – ownership and trading transparency. This past week I attended a meeting where the SEC announced a welcome proposal to improve transparency for certain dark pool activity. According to the announcement, “The SEC's proposals address three specific concerns related to dark pools:

• The first proposal would require actionable Indications of Interest (IOIs) - which are similar to a typical buy or sell quote - to be treated like other quotes and subject to the same disclosure rules.

• The second proposal would lower the trading volume threshold applicable to alternative trading systems (ATS) for displaying best-priced orders. Currently, if an ATS displays orders to more than one person, it must display its best-priced orders to the public when its trading volume for a stock is 5 percent or more. Today's proposal would lower that percentage to 0.25 percent for ATSs, including dark pools that use actionable IOIs.

• The third proposal that would create the same level of post-trade transparency for dark pools - and other ATSs - as for registered exchanges. Specifically the proposal would amend existing rules to require real-time disclosure of the identity of the dark pool that executed the trade.”

The entire proposal has not yet been released, but this is an important step forward for IR professionals by reducing volume thresholds for orders traded in alternative trading systems to be subject to a public order display obligation. Halleluiah! Additionally, the SEC has indicated they will issue a concept release in the near future with more changes for dark pools. As I am sure you can guess, these changes will be opposed by traders. NIRI expects to submit a comment letter and continue to urge for improved transparency, but this is a step in the right direction. As for implementation, I would assume we can expect a final rule sometime in the first half of 2010 with implementation shortly afterwards.

Finally this week, House Majority Leader Steny Hoyer is planning to introduce legislation requiring brokers to disclose to their street name stock holders when their stock is being used for short sales, and to ensure they are fully compensated for this use. It would also give the SEC authority to require brokers to publish daily: the identity of short sellers, the companies that are being sold short, the number of shares sold short, and any new “fails to deliver.” While the odds of passage are low, I am pleased by Washington’s increasing awareness of these kinds of issues, and I hope that as NIRI and others advocate for improvements we will eventually see passage of similar legislation.

Until next week,

Jeff Morgan, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

NIRI and other organizations have advocated for changes to the SEC’s notice and access (or “e-proxy”) regulation since the first year of use. Our issuer survey in September 2008 clearly indicated that changes were needed in order to improve voting participation and usability. Now, as issuers are in the early planning process for the 2010 proxy system, change may be at hand. The SEC issued a proposal at the end of last week that pointed to making some uncontroversial rule amendments which are likely to be approved very quickly (after a 30 day comment period) and available for implementation in 2010, although the timing will be tight. With the change in the discretionary broker vote (NYSE Rule 452), the use of e-proxy is a focal point, especially for small to mid-size companies with heavy retail holdings. But everyone should be aware of the proposed changes and should be considering if and how e-proxy figures into your 2010 proxy strategy.

According to the SEC, proposed changes include: “revisions to our rules to provide additional flexibility regarding the format of the Notice of Internet Availability of Proxy Materials that is sent to shareholders. We are also providing guidance about the current requirement for the Notice to identify the matters intended to be acted on at the shareholders’ meeting. In addition to the proposed changes and guidance regarding the format of the Notice, we are proposing a new rule that will permit issuers and soliciting shareholders to include explanatory materials regarding the process of receiving and reviewing proxy materials and voting. Finally, we are proposing revisions to the timeframe for delivering a Notice to shareholders when a soliciting person other than the issuer relies on the notice-only option.” (Italics added for emphasis).

My thoughts on the proposal:

1. The SEC indicates the changes are designed to increase the retail vote. The option for issuers to provide informational or educational information is needed as every company has experienced shareholder confusion with the materials and use of e-proxy. However, the decline of the retail vote is a larger problem that goes well beyond notice and access – the retail vote has been eroding for years.

2. Many companies changed their formatting after the first year thanks to an effort led by Broadridge (and supported by NIRI), with an informal acceptance by the SEC. The SEC will now formally approve these changes and it makes good sense. Hopefully this change will lead to continuous improvement to increase understanding and usability.

3. Timeframe revisions do not include a reduction of the 40 day window (to 30 days) for issuers which some desire, but does include a proposal affecting soliciting persons other than issuers which would “amend Rule 14a-16(l)(2)(ii) to require the soliciting shareholder relying on this alternative to file a preliminary proxy statement within 10 days after the issuer files its definitive proxy statement and to send its Notice to shareholders no later than the date on which it files its definitive proxy statement with the Commission.” The SEC did include a statement asking about the 30 day change for issuers and a statement about other changes that may be needed to achieve greater shareholder participation.

4. The SEC also publicly directs staff “to develop a program to educate and inform shareholders, especially individual shareholders, about the notice and access model,” and my hope is this will include information companies can use on their website and elsewhere to educate investors about the proxy process.

5. Some personal concerns about the proposal include questions by the SEC about whether stratification of proxy materials between notice only and full set delivery should be mandated based upon size of holdings, thereby eliminating choice by issuers. In my opinion, this seems to imply issuers could be trying to manipulate voting and, if true, I find that implication upsetting. As you know, issuers employ the stratification methods as promulgated in the adopting release for legitimate economic and governance reasons. The SEC goes further to question whether it should limit the ability of an issuer to use the notice-only option where the issuer has experienced a decrease in shareholder participation. Finally, the SEC asks whether suspending the notice and access rules until shareholders understand e-proxy is needed. While I appreciate that the SEC is ensuring investors are protected and is looking at all angles, questions like these can be construed negatively toward issuers. I hope that I am just being oversensitive and this was not the intent.

My message this week is a bit longer than normal but I want to share a couple of other items with you:

• I will attend an SEC meeting tomorrow that will include a public discussion of dark pools and whether regulation is needed. For issuers and IR professionals, this is an issue to watch.

• It is important for you to know that the Shareholder Communications Coalition (of which NIRI is a key member) sent a letter to CEOs of almost 1,000 companies this past week urging companies to support the modernization of the proxy voting system by placing this issue on your company’s public policy agenda. If you hear from your CEO on this issue, help them to understand why companies should voice their opinion and also understand how your membership in NIRI gives you and your company an advocate in Washington on these important matters. I also hope your company joins the Coalition’s e-mail update list to stay abreast of this important issue.

Finally, the SEC and CFTC released their joint report on “Harmonization of Regulation” last week. This report calls for some twenty recommendations – including joint enforcement or anti-fraud squads, as well as making it unlawful to trade using non-public information from any government authority in the commodity futures markets! This report has been well received by many in Washington, but the proof will be in the implementation.

Until next week,

Jeff Morgan, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

With the healthcare discussion moving into later stages in Congress, the House of Representatives is turning to financial regulatory reform legislation. Topics subject to debate include increased consumer protection, hedge fund oversight, OTC (over-the-counter or non-exchange) derivatives oversight, closing financial regulatory gaps, investor empowerment and increased corporate oversight, to name a few. As they have begun to both see the complexity of the financial system, and hear from their constituents, some in Congress are saying success will be “smart” regulation not just “more” regulation.

While this may seem obvious to everyone outside the Washington Beltway, it may be an indication that politics are beginning to work, even in a Congress that is heavily dominated by one party. (For those wondering how this relates to IR, stay with me for a few sentences.) Take, for example, House Financial Services Committee Chair Barney Frank’s plan to regulate OTC derivatives – a plan which is very different than the Obama (Geithner) plan. The Frank plan includes numerous exemptions that some argue make it too lax on financial firms. Dr. Henry Hu, Director of the newly-established SEC Division of Risk, Strategy, and Financial Innovation, has indicated problems with Frank’s plan including the continued lack of regulatory oversight for some products due to new limits that would be placed on the regulator. He said that Frank’s plan would “inadvertently weaken the SEC’s anti-fraud and anti-manipulation authority,” and seems to “enable significant regulatory arbitrage.” As I see it, this is not where we want to go. IR professionals want to be sure the trading of our stock on cash markets – like the NYSE and NASDAQ – cannot be influenced by derivatives or other financial instruments as happened with abusive short selling. So what might be happening with financial reform in Washington and what might this early sign mean?

It seems clear that Congress will pass some type of final financial reform legislation in the next year. Legislation has been promised by President Obama and I expect that promise to be kept. Could it also mean that politicians may step away from some of the more challenging decisions, hopefully empowering the regulator(s) with expertise to fix the problems? If this is true, then the SEC’s Draft Strategic Plan released this week is important. While I have attached the link (for those who would enjoy 55 pages of dry reading), the key points are the SEC is calling for significantly enhanced resources in the areas of staffing, technology and expertise. The Schapiro-led SEC is saying the agency needs a significant upgrade in critical infrastructure and types of manpower to do its job. This is at once a scary and welcome acknowledgement, and something we all need to watch.

So the SEC continues to be the significant regulatory focal point for NIRI and for IR. A recent speech by SEC Commissioner Walter gave an excellent summary of her mindset – a Commissioner who also has the ear of Chairman Schapiro. I urge you to read the relatively brief transcript that gives a very good Commission perspective on MD&A changes, climate change disclosure, NYSE 452 adoption, proxy enhancements and IFRS adoption. These are all important updates and might even be helpful to pass along to your management team. I also think you will be pleased that the advocacy work on proxy plumbing by NIRI and the Shareholder Communications Coalition is a priority of the Commission.

Finally, last week I attended a NYSE Advisory Committee meeting. The NYSE has also convened a governance task force with broad ranging expertise to examine many of the issues being discussed in Congress and the SEC. I mentioned in a recent IR Weekly that NASDAQ is doing something similar. Could it mean that if the SEC is starved for expertise, they too would seek assistance and that some of the discussion for changes may occur in the area of listing standards for public companies? From where I sit representing IR professionals, that discussion would be welcome as companies would have an equal seat at the table and help to decide the future fate of some very important corporate governance matters. Time and actions of several key entities over the next few months will show the exact path of financial regulatory overhaul.

Until next week,

Jeff Morgan, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

On Friday, SEC Chair Mary Schapiro announced that the Commission would delay voting on either proxy access or federally mandated standards for shareholder nominated directors, from November 9, 2009 to early 2010. Schapiro indicated the SEC needed more time to evaluate comments, modify the final rule and vote on the proposal. This makes perfect sense as generally it takes four to six months after a comment period closes on an SEC proposal before a vote. The comment period on this proposal closed in mid-August suggesting an early 2010 decision, which is exactly the revised time table. So why did the SEC ever plan to approve the rule so quickly, and what other extenuating circumstances may have come into play at the SEC?

Allow me to speculate – the SEC knew they had the votes to approve and implement proxy access for the 2010 proxy season. With all the work done over the years on proxy access, I suspect there was a feeling that an accelerated date would be easily met. But a few things have happened over the past few months that I believe also entered into their decision:

1. First, many believe the SEC’s legal authority to mandate proxy access is questionable without Congressional authority. Financial reform in Congress has slowed dramatically due to the time it is taking to get healthcare reform passed. Senator Dodd has indicated that final financial reform legislation will not pass the Senate until January 2010. So it makes some sense for the SEC to wait and see what happens in Congress before proceeding. Will Congress give the SEC proxy access authority? The legislation will begin to take form in late November and December so stay tuned.

2. Second, if there are delays beyond early November, and/or depending upon the intricacies of the final rule, could Broadridge implement the desired system changes in time for a 2010 start? It would be disastrous to move forward with a system that wouldn’t necessarily be fully tested by Broadridge in time for proxy season, and that has the potential to make 2010 proxy results questionable.

3. Third, I believe many are worried about the potential combined impact from eliminating NYSE Rule 452 and implementing proxy access. I certainly am. You may recall NIRI’s concerns on these matters in our comment letters on NYSE Rule 452 and proxy access. I think these concerns have grown over the past few months. An adverse outcome for public companies could have raised serious concerns about the SEC’s actions and had serious political ramifications.

4. Fourth (and I would like to think this was a very critical piece of the SEC’s thinking), NIRI and other groups that are a part of the Shareholder Communications Coalition have been pushing hard to shed light on problems with the proxy system, or “proxy plumbing.” I think fixes are needed before the proxy system collapses under its own weight. I believe the SEC realizes this as well, so waiting for some solutions in proxy plumbing along with a decision on proxy access is best for investors, issuers and our capital markets. Just this past week the Coalition spent several hours at the SEC discussing our August draft to improve the system. The SEC has acknowledged the problems and is working on proposals to fix proxy plumbing issues (NOBO/OBO, share lending, accuracy of elections, etc). I believe the SEC is sincere in its desire to improve this system, and will hopefully start to circulate potential solutions in early 2010 as well.

5. The fifth concerns the SEC’s two part proposal – one part would create federally mandated proxy access (14a-11), and the other part would allow shareholders the ability to amend a company’s nominating process using the normal proxy channels (14a-8(i)(8)). If the SEC acted in November, it would have likely only approved the latter ability (14a-8(i)(8)) due to the open questions as just discussed, despite their desire to approve both proposals. I suspect there was a belief that if the SEC only approved one part, it would be very difficult to get the other part approved at a later date. So the delay of a few months and one proxy season may enable the SEC to approve both pieces of the proposal in just a few months.

The bottom line is the delay of a proxy access vote until 2010 – welcome news for issuers (if only for potentially a few months). But this announcement allows everyone to begin planning with certainty for next year’s proxy season. Companies need to focus now on preparing for the upcoming proxy season following the changes to NYSE Rule 452 and the loss of broker voting for directors, and this should include educating investors on the importance of their vote. Hopefully others (exchanges, SEC, broker dealers, etc.) will accept the mandate that they have the responsibility to educate on this point as well.

Other news of interest to investor relations professionals from the past week includes:

• The SEC held two days of meetings on short selling. It looks like the possibility of creating a pre-borrow requirement for short sellers beyond just locating the stock is dead (for now). But regular short position disclosure in a 13F-like filing seems to have gained new life (much like it did in the U.K. with last week’s FSA announcement), along with some type of circuit breaker or uptick mechanism. I am still hopeful the SEC will pass a final rule before the end of 2009.
• Also this past week the SEC and CFTC missed the President’s deadline for a joint report on fixing the regulatory void between derivatives and equities, but announced a date of October 15 for the release of their proposal.

Until next week,

Jeff Morgan, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

As September draws to a close, this week marks some important areas of focus in Washington for investor relations professionals. In addition, the last few days have also been full of IR profession-related news including:

• Today marks the first of two days of public SEC meetings on “Securities Lending and Short Selling.” Before the end of the year, the SEC will likely announce new measures to control short selling with the focus on limiting potential abuse. There has been much discussion on this in Washington, with many divergent views on action – particularly a return to the uptick rule. The consensus seems to be pointing to a circuit breaker rule to ensure short sellers cannot “pile on” and pull a stock down in an abusive fashion when the decline meets a certain percentage threshold. NIRI is a proponent of additional short selling measures and I am pleased pre-borrowing (the ultimate fix) is also part of the discussion.

• Tomorrow the SEC and CFTC are to report on ways to bridge the regulatory void between derivatives and equities. Resolution of this problem focuses on moving securities-related derivatives to SEC jurisdiction. Politics on the matter are strong in DC with the House Agriculture Committee Chair, the committee that regulates the CFTC (as it roots are in agricultural commodities), not interested in relinquishing oversight control. Fixing this regulatory void extends beyond Democrat and Republican politics and has been an ongoing battle of Congressional “oversight committee” infighting for years.

• You may have seen SEC action at the end of last week in a Reg. FD selective disclosure matter against a former CFO of American Commercial Lines who was also the company’s investor relations contact. The individual was not a member of NIRI and reinforces, as I have stated several times over the past few months, the need to be vigilant and ensure Reg. FD compliance. It also reinforces the case of the value of membership in organizations like NIRI where continuing education, interaction with peers and a focus on best practices helps to ensure you have the knowledge and tools for compliance.

• The NASDAQ Listing and Hearing Review Council is undertaking a corporate governance “best practices” review and soliciting input on what, if any, these practices should be. These are important initiatives and I am hopeful companies and others will express their views. This kind of action helps to create some balance to those sometimes one-sided views coming from Washington, especially in the areas of corporate governance.

Finally this week, I want to congratulate Brad Wilks on his election as the 2010 chairman of the NIRI Board of Directors. Wilks is Managing Director of Sard Verbinnen & Co, a leading provider of strategic corporate, financial and crisis communications counsel and services. He succeeds Bina Thompson, Vice President, Investor Relations, Colgate-Palmolive Company who will end her term in December. The NIRI Board also approved the slate of four new NIRI National Board members. The NIRI membership will be asked to vote on the election of the four nominees by proxy ballot in mid-October. The candidates will officially be elected at the annual meeting in December. Candidates nominated for a four-year term are:

• Hulus Alpay, Director, Investor Relations, Medidata Solutions Worldwide, New York, NY
• Mary Beth Kissane, Principal, Walek & Associates, New York, NY
• Andrew Kramer, Director, Investor Relations, Interactive Data Corporation, Bedford, MA
• Michelle L. Schwartz, Director, Investor Relations, JDSU, Milpitas, CA

Members will receive ballots for NIRI national board elections in the next several weeks with NIRI’s annual meeting occurring in San Francisco on December 1, 2009.

Until next week,

Jeff Morgan, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

Washington was back to full speed this past week as momentum on all fronts returned to pre-summer recess levels. Congress and regulators alike are focused on action, so the timing was perfect when the NIRI National Board descended on the SEC late last week to discuss a wide range of topics. The SEC took the meeting seriously with 22 staff members attending and participating in the dialogue.

The discussion included topics like ownership transparency, improved shareholder communications, short selling and challenges with financial disclosure. The Board and I were pleased with the exchange of information and the keen interest and serious commitment by the SEC to examine areas that included: e-proxy changes, empty voting, over voting, NOBO/OBO, proxy advisory service practices, and costs related to communicating with shareholders (distributing proxy materials). I believe the meeting was very instructive for all regarding understanding public companies’ struggle to identify their shareholders, the desire to streamline transparency including better use of technology and improvements to mandatory SEC filings, as well as the SEC’s current thinking on these matters. It was a very productive afternoon in terms of advancing the IR profession.

Other noteworthy items for IR professionals include:

• The SEC proposed a prohibition on flash trading due to the associated inequity of allowing select participants to act on market orders in advance of the public, thereby creating a two-tiered system. This was the right move by the SEC to ensure no one is disadvantaged.

• The House has set September dates for testimony leading up to the overhaul of financial regulation and corporate governance. While the health care debate has slowed focus on this agenda, it is picking up steam. The lobbying on both sides is also taking hold with the outcome on whether there is really a need for another agency - the CFPA (Consumer Financial Protection Agency) - as a starting point. Many, including myself, are unconvinced of the need. Other early handicapping seems to indicate some rethinking by Congress. For instance, mandating the separation of CEO and Chairman is heading toward the sideline, while focus on a mandatory board certification process is increasing. To be sure, the lobbying is strong on both sides and the entire financial regulatory agenda, including proxy access, continues to be up for debate. Take a few minutes to visit either www.shareowners.org/ or www.stopthecfpa.com/ if you want to learn about efforts to create grassroots influence.

• As the SEC has attended to other matters, IFRS has seemingly been in the back seat. However, the new SEC chief accountant, James Kroeker, did give some indication that the SEC will re-focus on IFRS in the coming months as pressure increases from the international accounting community for the U.S. to fall in line.

• I was pleased to finally see the long rumored announcement from the SEC of the formation of an Office of Risk, Strategy, and Financial Innovation with University of Texas School of Law Professor, and past NIRI speaker, Dr. Henry Hu as the head. Hu has conducted extensive research into the separation of economic and voting interest in U.S. equities. I am hopeful that as the CFTC and SEC look at bridging regulatory gaps between derivatives and equities, Dr. Hu will help to keep both agencies focused on closing this dangerous gap, particularly in light of dramatic governance changes currently being considered such as proxy access.

Until next week,

Jeff Morgan, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

When I suggested that watching healthcare play out in Congress would be interesting, I never imagined just how quickly it would happen! If Congressional reaction to President Obama’s speech is any indication of what is to come, it certainly promises to be an extraordinary fall. Congress was full of surprises last week with USA Today reporting that in a soon to be released biography, influential House Financial Services Committee Chairman Barney Frank says he would like to finish his career in Obama’s cabinet as secretary of the Housing and Urban Development Department. And despite the opportunity to take over for the late Senator Kennedy as chair of the Senate Health, Education, Labor and Pensions Committee, Senator Chris Dodd decided to remain as chair of Senate Banking, Housing and Urban Affairs Committee which many see as a signal that some form of financial regulatory reform will pass this year.

There were, however, several developments more directly related to the Investor Relations profession last week:

• The SEC provided detail around its upcoming short sale roundtable. It will now be one and a half days on September 29 and 30 according to the agenda. The Notice indicates that the purpose of the roundtable is to, “solicit the views of investors, issuers, financial services firms, self-regulatory organizations and the academic community regarding securities lending and short sales. The roundtable will include a comprehensive overview of securities lending and also analyze possible short sale pre-borrowing requirements and additional short sale disclosures.” This event is a positive development for NIRI members as short selling reforms are a part of NIRI’s advocacy agenda.

• In a development that resurfaces periodically, Sen. Schumer plans to introduce legislation that would permit the SEC to keep fines it collects, according to reports. Though this self-funding bid doesn’t enjoy unanimous support, it may get further this time around given the momentum behind financial regulatory overhaul and the debate around SEC resource adequacy.

• In a development with potentially favorable liquidity implications for NASDAQ-listed companies, Traders Magazine reported that the NYSE will begin trading all NASDAQ stocks on its AMEX market next year. Each stock will have a single designated market maker assigned to it, with one or more additional market makers, which the exchange operator calls supplemental liquidity providers, also assigned to most securities.

Finally, you should know that in conjunction with this week’s NIRI Board of Directors meeting, a number of board members and I will meet with the SEC at their headquarters for several hours to make the Commission aware of the issues most relevant to the Investor Relations profession. I look forward to reporting back to you on this discussion, and continuing to advance the interests of the IR profession here in Washington and beyond.

Until next week,

Jeff Morgan, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

Today Washington officially returned to business from summer recess. You may recall last month when recess started, I predicted that many politicians would return to Washington with a new sense of their constituents’ interests. I think many from Congress and the Senate heard an earful, particularly about healthcare. President Obama is under intense pressure on his healthcare initiative, and it will be interesting to watch this play out in Congress over the next few months especially considering the passing of Senator Ted Kennedy, who chaired the Senate Health, Education, Labor and Pensions Committee. Senator Kennedy’s loss also has the potential to create a new political dynamic around the corporate governance reform movement as Senator Dodd may switch his committee chairmanship from Banking, Housing & Urban Affairs to Kennedy’s now open chair position.

For those focused on Investor Relations, here a few items of interest from the past week:

• Speaking of change, I was pleased that the NYSE Euronext announced the creation of an advisory commission to examine corporate governance and the overall proxy process. In the past, the NYSE has taken a leadership role looking at proxy issues via the NYSE Proxy Working Group. But with the swirl of activity around corporate governance changes in DC, the need to reform the shareholder communications system and the need create better transparency of ownership, this is a positive step forward. The Committee will be chaired by Larry Sonsini. I believe this expanded focus can only help to highlight problems with outdated regulation and regulatory oversight. It is a constructive step to strip away political jockeying and look holistically at the entire system, suggesting positive changes for investors, issues and the integrity of the financial markets. I serve on the NYSE Individual Investor Committee and look forward to the dialogue on improving issuer-shareholder information flow, especially as a result of the elimination of NYSE Rule 452 (broker discretionary votes on director elections become non-routine on January 1, 2010) in the coming months.

• If you follow me on Twitter, you may recall that I highlighted a news story about the change in the U.S. mutual fund universe. Year to date in 2009, more than 396 mutual funds have disappeared while only 156 new mutual funds appeared. In 2008, more than 438 funds disappeared, but 487 new funds were created generating a net positive for the year. This is a trend to watch for investor relations professionals as the world of passive ETFs (Exchange Traded Funds) continues to grow. I expect the world of actively managed mutual funds and passive ETFs will continue to evolve well into the future.

One final note that I want to be sure to highlight is a new process this year for developing sessions for annual conference – you may have seen the announcement in last week’s IR Weekly. One of the core benefits of being a NIRI member is that you are part of an open and caring culture of IR professionals who help each other professionally. This is very evident at our annual conference where many members share experiences, best practices and cutting edge trends by speaking to their peers during the three day conference. In the past, the member-based NIRI Annual Conference Committee developed topics and then found members to speak on these topics. Next year, NIRI’s conference will be held in San Diego and we are asking members to self identify their area of expertise and consider submitting a session as part of the ”Call for Presentation” process. This will enable your Annual Conference Committee (which begins its efforts in earnest later this month) to pick sessions from those submitted, as well as develop session around topics of importance and interest to members. I think this will make our annual conference even better and with richer content. We announced this process last week and have already received submissions from several members. Thanks in advance for your consideration of sharing your story and expertise with other members next year in San Diego. Speaking of San Diego, we have some special things planned for next year’s conference, so please put the dates of June 6-9, 2010 on your calendar now so you don’t miss it. Did I mention free hotel nights?!? Stay tuned for details coming later this fall. 

Until next week,

Jeff Morgan, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

This is transition week in Washington as we approach Labor Day weekend. Schools, including colleges are returning to session. President Obama returned from his family vacation and Washington politicians are starting to ramp up their fall agendas. Next week things will return to full gear. However, for the remainder of this week, Washington remains quiet, so I will focus on just a few things of interest for IR professionals:

• A segment of NIRI members received an invitation to take the third annual “Notice & Access” survey this past week. Your participation is appreciated as we collect e-proxy trends in conjunction with the Society of Corporate Secretaries. NIRI continues to pursue some minor Notice & Access changes at the SEC, and the survey results will be used to highlight the need for some tweaks in e-proxy regulation. Your participation ensures your voice is heard, as well provides solid data to benchmark yourself against peers.

• The Wall Street Journal published an article (subscription may be required) last week on the fight brewing over the SEC’s proposed proxy access rule. While the comment period ended in mid-August, this will continue to be debated in Congress this fall as a federal proxy access mandate needs Congressional approval to ensure the SEC has the authority to enact such a requirement.

• The SEC and FINRA issued a warning about non-traditional ETF’s. The focus is on leveraged and inverse ETF’s that use derivatives versus an index of underlying stocks. The CTFC has been investigating excessive speculation and many wonder if these types of ETF instruments have contributed to the ability for easy speculation.

• I am pleased to see that University of Texas professor, Dr. Henry Hu, will be appointed by the SEC to a position overseeing risk assessment. Dr. Hu is an expert on the use of sophisticated derivatives and has done extensive research into the separation of economic from voting interests in public companies. Dr. Hu has been critical of hedge funds, and has spoken to NIRI members on hidden ownership of equities in the past. I look forward to his insight continuing to highlight and correct this troubling situation for investors and companies, especially in light of the elimination of NYSE Rule 452 and the contemplation of federally mandated proxy access.

In closing, I want to remind those of you who may be new to investor relations; there is still time to register for NIRI’s “Intro to Investor Relations” in Boston from September 20th through 23rd. This program only happens twice a year and is a must for anyone who is in their first few years of investor relations or whose job responsibilities include IR. This is your chance to listen to experts discuss all the facets of the profession, as well as find out answers to your IR questions. Whether you are a new IR professional, a CFO or a communications professional that needs better understanding of investor relations, this is the place to be. I’ll be there and hope to meet you there too.

Until next week,

Jeff Morgan, CAE
President & CEO
jmorgan@niri.org
www.twitter.com/jeffreydmorgan

This week starts the beginning of the return to schools and colleges around the U.S., while politicians find themselves reaching the mid-point of their summer recess. We also find Washington becoming even quieter as President Obama enjoys some vacation too. Since things in Washington are quiet, and because I spent much of the week at the IR certificate program offered in partnership between NIRI and the University of Michigan, I am going to use this week to recap a few things that you may have missed over this past summer.

1. REG FD Update: Be sure to read the latest SEC Reg FD Compliance and Disclosure Interpretations released on August 14. Though, depending on your experience level you may not find too much new here, it is a great reminder for all IR professionals as well as a good pass-along to others in your organization.

2. Proxy Access Update: Hopefully you have read NIRI’s comment letter to the SEC on Proxy Access. I also encourage you to read the letter from the Shareholder Communications Coalition, of which NIRI is a member, on proxy access. Hundreds of letters have been sent to the SEC on proxy access and they can be accessed here if you are interested.

In reviewing many of the proxy access comment letters, it appears the primary legal arguments against federally mandated proxy access are: 1) this is a matter for state corporate law; 2) the SEC does not have the federal authority to mandate this change (the SEC has even raised this question and Congress is trying to fix that); and 3) in a well laid out argument Stanford Professor Joe Grundfest believes the proposal violates the Administrative Procedure Act.

This fall we will see proxy access debated in Congress and are likely to see an SEC rule by Thanksgiving.

3. Short Selling Update: Over the summer the SEC issued permanent Reg. SHO rules to ensure the potential for abusive short selling is curtailed. The SEC also had been expected to announce their decision on reinstating a new uptick rule or implementing circuit breakers in September. However, the SEC has instead reopened the comment period for 30 days and decided to hold another open meeting at the end of September on short selling. Everyone still expects the SEC to make a final decision on this matter in the fall.

4. SEC & CTFC Harmonization Update: NIRI continues to watch the world of derivatives as they can play a role in affecting the price of equities, and can also be used to separate the economic and voting interests of equities. The SEC and CFTC continue to move along a path of creating a new regulatory regime to address these issues. This past week they announced open meetings in early September to seek public input on harmonization.

5. IFRS Update: IFRS seems to be stalled as the current SEC is focusing on other matters.

6. XBRL Update: Large filers have begun submitting XBRL tagged quarterly reports to the SEC. However, this recent post on the EdgareView blog indicates things are not completely smooth.

7. Flash Orders Update: The SEC continues to indicate they will look at flash orders, dark pools and other parts of our evolving U.S. markets to ensure all is proper. However, according to a recent WSJ article (paid subscription may be required) the SEC is struggling to attract the right personnel knowledgeable about these areas.

Enjoy the remainder of your summer!

IR Never Sleeps and Washington Never Rests Washington lawmakers continued their recess last week, while the news showed these same lawmakers meeting with constituents in their home states. Full of headline-grabbing lively conversation, it will be interesting to see how this input will affect the agenda in Washington in the fall. While the lawmakers may be away, business continues and we all know IR never sleeps.

Yesterday marked the closing of the SEC comment period for proxy access. NIRI filed our comments and I urge you to read the letter to understand our priority concerns. While we do not support federally mandated proxy access, we do support the ability of shareholders to amend corporate bylaws and add shareholder approved proxy access. NIRI views issues of shareholder ownership transparency and improved shareholder communications as critical for SEC focus. NIRI is very concerned that combining the recent broker vote elimination with proposed changes such as proxy access may lead to a “SOX” type impact on public companies resulting in unintended and potentially detrimental consequences – consequences that will be magnified without an improvement in ownership transparency and shareholder communications.

To this end, a few weeks ago the Shareholder Communications Coalition publicly suggested changes to improve the ability of public companies to communicate directly with their shareholders. Some of these concepts are echoed in NIRI’s proxy access comment letter. I encourage you to join the Coalition’s e-mail alerts list to stay up to date on their work on behalf of public companies. In a response the Coalition received last week, SEC Chairman Schapiro said, “As you know, the Commission has directed the staff to undertake a comprehensive review of potential improvements to the existing regulatory framework governing proxy voting and shareholder communications, and I appreciate your support of this endeavor. I also sincerely appreciate the efforts of the Shareholder Communications Coalition and its members in discussing concerns regarding the existing regulatory framework with the Commission and the staff. With over 800 billion shares being voted annually at over 7,000 company meetings, it is imperative that our proxy voting process work well, beginning with the quality of disclosure and continuing through to the integrity of the vote results.” Like all of you, I look forward to this comprehensive review and the resulting improvements.

You have no doubt continued to see the many stories on flash and high frequency trading. Some have confused these two terms and are targeting both as bad. The focus of the SEC’s review is not high frequency trading, which is not a new concept, but the potential for abusive flash trading. Ed Boyle, NYSE Euronext Inc., VP states,”This is leakage of information ahead of an execution to a small group of participants.” In my opinion, this would be considered a problem, and is why I am pleased the SEC is examining these inequities in the stock and now options markets.

I should also mention two very recent SEC announcements beginning with Friday’s release of new required reading for IROs – the SEC’s Reg FD Compliance and Disclosure Interpretations. And yesterday the Commission announced that it is seeking public comment on an alternative short sale uptick rule. According to the release, this approach may be more effective and easier to implement than previously proposed price test restrictions and would allow short selling only at an increment above the national best bid. The SEC is reopening the comment period for 30 days in order to receive input specifically on this alternative.

Finally, I want to mention again that I have joined Twitter and invite you to follow me at www.twitter.com/jeffreydmorgan. Last week, I tweeted about filing NIRI’s proxy access comment and within 30 minutes received an e-mail from a member about the letter. I am using Twitter as a way to provide those who are interested with real time updates about NIRI, as well as what I might be reading or seeing in Washington. It is also a great excuse to see what Twitter is all about.

This past weekend Congress left en masse for a month long recess to return to their home districts and get away from Washington. They left after approving a new Supreme Court Justice (Justice Sotomayor) and a $2 billion fill-up for the cash-for-clunkers program. But they also left without desires fulfilled for major reform in financial regulation and health care. The legislative agenda for the fall is sure to be aggressive and will certainly be lively.
 
I want to start my investor relations focus this week by mentioning a speech by Ethiopis Tafara, Director of the SEC’s Office of International Affairs, who discussed our present global financial situation and why financial regulatory reform is a global issue. Director Tafara explained that, “the four characteristics of the modern financial market are:
 
    1. its global nature and the resulting mobility of capital;
    2. the significantly increased competition among financial service providers; 
    3. the elimination of differences between historically separate financial products, sectors, and actors; and 
    4. the development of a large and relatively liquid unregulated institutional financial market paralleling the regulated markets.”

In my opinion, this is also why IR continues to evolve and why we are now paying attention to trends that may never have been on our radar screen previously – trends such as “flash trading.” I was pleased to see this past week both NASDAQ and BATS announce an upcoming ban on flash trading effective September 1, as the SEC continues to examine any inequities created by these trades. Watch for more on this throughout the fall.

I was also very pleased to see the SEC take enforcement action for a Reg. SHO abusive “naked” short selling violation. We had been expecting a final SEC pronouncement in September on further short selling measures like an uptick rule or implementation of circuit breakers. However, recent comments by SEC Chairman Schapiro have fueled speculation that the SEC may reopen the public comment period in what I hope will be a discussion on pre-borrowing. As NIRI stated in our May comment letter (pdf) to the SEC on this matter, a system of pre-borrowing at the time of a short sale is the ultimate solution to eliminating abusive short selling. Stay tuned as this plays out in the fall.
 
Something else on the agenda of the SEC this fall and in the minds of IR professionals is an examination of the shareholder communications systems and changes to e-proxy. The SEC’s new Director of Corporation Finance, Meredith Cross, recently reiterated these as items of focus. Your NIRI Board will be meeting with Director Cross and others at the SEC this fall to discuss the IR practitioners’ perspective on these and other issues. In the area of shareholder communications, the Shareholder Communications Coalition , of which NIRI is a founding member, released a discussion draft (pdf) for improving shareholder communications. This was sent to interested parties in Washington and beyond and will be a starting point for discussion this fall on many of these issues.
 
Another topic of much discussion this fall will be corporate governance – particularly shareholder nominated directors or proxy access. Next week I will share with you NIRI’s comment letter to the SEC, but for now I invite you to read a report (pdf) from the IRRC Institute titled “Proxy Voting by Exchange-Traded Funds: An Analysis of RTF Voting Policies, Practices and Patterns.” ETFs continue to grow in the U.S. and the impact of ETF funds is significant for IR, including the impact that ETFs may have after potential changes in governance, like proxy access.

Finally this week, NIRI launched our new Web site a few weeks ago, and I hope you’ve had a chance to check it out. You will find new features and abilities expanding during the fall as we begin to use the new site’s full functionality. One significant area of improved functionality is our ability to publish this column as a blog and push it out through RSS feeds. I invite you to comment on the topics discussed in this weekly column. This past week, some of you have found me on Twitter at www.twitter.com/jeffreydmorgan. I am now using Twitter as a way to pass along my thoughts (and yes they are mine – including this column which I personally write) throughout the week. I plan to pass along news stories, comments and other posts that I believe are valuable to those in IR. If you have not stepped into the world of Twitter, this is your chance to learn a bit more about this communications tool while staying abreast of IR news. Also join the NIRI National Twitter site - http://twitter.com/NIRI_National. As always, I welcome and appreciate all of your comments and criticisms regardless of how they might arrive – in person, mail, phone, facsimile, e-mail, blog post, text message, LinkedIn, and now Twitter. Whew!

August 8th marks the beginning of Washington’s “summer recess” – meaning Congress won’t go back into session until after Labor Day (September 8). Everyone goes home and reconnects with those who elected them. However, this won’t be a normal summer recess. Many of the legislative issues the Obama administration wanted to enact as new legislation by August 7th are still under discussion by Congress. So that means we can expect all sides to stump throughout the remainder of the summer on issues like healthcare and financial reform. The main spotlight will fall to President Obama who will use the next month to push his agenda as well. Get ready!

IR has no summer recess, so let’s focus on what is happening in Washington:

• Last week, I mentioned an announcement by the SEC that it will make permanent some temporary short selling rules that were set to expire. These temporary rules have gone a long way to stop abusive short selling. NIRI has been an advocate for making these rules permanent. You may recall our spring comment letter to the SEC on this matter. So, I was pleased with the action by the SEC regarding these short selling measures. In late September, we will likely hear more about short selling as the SEC should decide on reinstating the tick test and/or implementing circuit breakers. The SEC has also scheduled a meeting for September 30, where I expect pre-borrowing systems to be discussed as this is the best way to stop abusive short selling.

• Is “flash trading” the next abusive trading issue to be addressed by the SEC? It could be, and it has come into sharp focus the last two weeks; we mentioned this in last week’s The Buzz section. Now Congress is involved and has asked the SEC to investigate. While algorithmic trading has been around for some time, flash trading plays off of price volatility and has dramatically increased since the implementation of Reg. NMS (pdf) a few years ago. If this volatility undermines the long term value proposition of a company, then it is problematic for all IR professionals. And, if flash trading creates an unfair advantage for traders with the right access, then this needs to be rectified. The SEC’s John Nester said, “The SEC staff is specifically examining flash orders to ensure best execution and fair access to information for all investors.” I am pleased to see the SEC jumping on this before it becomes another naked short selling type of issue that went unaddressed too long before the SEC stepped in.

• On Friday the House approved the “Corporate and Financial Institution Compensation Fairness Act” (pdf) calling for an annual say-on-pay vote, and the implementation of a “Federal Pay Czar” to prohibit corporate pay practices within financial institutions deemed harmful to other financial institutions, or the broader economy. Also included in this legislation are new independence standards for compensation committees. After summer recess, the Senate will consider similar legislation within corporations. It is clear there continues to be a great deal of populist anger on main street America about corporate executives’ compensation and risk taking.

In my remaining space for this week, I want to call your attention the Delaware State Bar Association comment letter (pdf) to the SEC on proxy access. I think this letter is typical of corporate thinking on this matter. NIRI will submit a comment letter to the SEC on this matter before the August 17 deadline. I encourage your companies to do the same.

Until next week,

Jeff Morgan, President & CEO
jmorgan@niri.org

This past week, the Obama mandate of change slowed a bit as members of Congress examined details of proposed legislation. Questions of costs, consequences, and debate about the necessity of voting before summer recess all slowed the process. The voices saying, “too much and too fast without proper analysis,” became louder in Washington.

In IR last week, there were several notable items:

·          The Obama administration sent legislation to Congress that would allow the federal government to move large public companies (whose collapse would undermine the entire financial system) into government conservatorship when these companies are deemed close to collapse. This is a new financial crisis response role for the federal government. While it is meant to be an apolitical solution that creates a swift response mechanism in times of financial turmoil, I believe we must all watch the legislation’s language to see if it is so broad to include non-financial companies. 

·          The SEC has provided Congress with 40+ areas of desired changes to securities law that would allow it to be more effective. These changes include: authority to set the definition of “independent director,” the ability to obtain information about an adviser's clients (including hedge funds), and several other changes that already appear in legislation – advisory votes on executive compensation and ensuring the independence of compensation committees, as examples.

·          I mentioned a few weeks ago about needed changes to the SEC’s authority over certain derivatives that affect securities pricing in the cash markets. The Derivatives Trading Accountability and Disclosure Act takes the talk and moves it to proposed legislation by allowing the SEC to oversee securities-related derivatives, while the CFTC would oversee agricultural, commodities, and futures-related products. This appears to be a good solution and would assist the SEC address suspected manipulative short selling using derivatives to apply downward pressure to equity pricing. 

·          Speaking of short selling, a bipartisan group of seven senators asked the SEC to consider addressing naked short selling by utilizing a stock location system to be operated by the DTCC. The system would create a hard locate of shares when shorted and bar the short sale unless the executing broker obtained a unique identification number for the specified shares from the DTCC. While this appears to be an excellent solution to eliminate abusive shorting, the SEC itself announced additional short sale measures yesterday, noting that it is still actively considering proposals on a short sale price test and circuit breaker restrictions.

·          For those of you using or considering using Twitter, I want to point out the need for proper disclosure policies when using social media. I recommend familiarizing yourself with a recent Twitter example regarding Ruby Tuesday’s CEO. IR Magazine did a nice article on explaining this matter of a tweet on July 20th. 

·          Over the past couple of weeks, I have mentioned the SEC’s proposed changes of Proxy Disclosure and Solicitation Enhancements. As the SEC has indicated, “These new disclosures are designed to enhance the information included in proxy and information statements, and would include information about: the relationship of a company’s overall compensation policies to risk, the qualifications of directors, executive officers and nominees, company leadership structure and potential conflicts of interests of compensation consultants.

In addition, the proposals are aimed to improve the reporting of annual stock and option awards to company executives and directors as well as to require quicker reporting of election results. The Commission also proposed amendments to the proxy rules intended to clarify how they operate.“

While the proposal is 137 pages, you can find a quick overview in the July 1 SEC staff testimony. If your company believes the changes are inappropriate, write the SEC and let them know. I would also be interested in knowing your thoughts, so please post a blog entry or send me an e-mail. As I read the proposal, I wondered whether there will be privacy concerns regarding some of the disclosure. I am also hoping the SEC ensures these disclosures are in sync with any proxy proposal that may be approved.

Last Thursday you received an e-mail from me requesting your participation on a survey regarding proxy access. Your participation is critical, as it will help to craft NIRI’s response to the SEC. Please complete the survey if you have not already done so, and thanks to those that have already responded. I also suggest everyone reads an analysis of some of the contradictions with the current proxy access proposal as reviewed by Professor Joe Grundfest of Stanford University. Last evening I participated on a panel discussion that was attended by more than 100 members of the NIRI NY Chapter on this issue. I was pleased to see the high attendance and the desire to learn more about these proposed governance changes and its affect on IR professionals in 2010 and beyond.

Finally, I’d like to remind you that a great way for members to stay at the top of their game is through our partnership with the University of Michigan’s Ross School of Business Executive Education program “Theory and Practice of Investor Relations.”  Offered August 16 – 21, 2009 in Ann Arbor, the weeklong immersion provides action-based learning – with special pricing for NIRI members. I participated in this program last year, and look forward to meeting many of our members again this year at this excellent IR learning experience. More information is available on the NIRI Web site.     

Until next week,

Jeff Morgan, President & CEO

jmorgan@niri.org