DONALD Trump’s administration is mounting a comprehensive push against shareholder rights through sweeping regulatory changes that could fundamentally alter America’s capital markets, said the Financial Times.
The Securities and Exchange Commission (SEC) last week announced plans to help companies limit shareholder lawsuit risks by moving disputes into private arbitration rather than public courts. The regulator will consider on Wednesday whether firms can go public with mandatory arbitration clauses embedded in their corporate charters.
Trump separately urged the SEC this week to abandon decades-old rules requiring quarterly financial disclosures from most public US companies.
The moves follow Monday’s SEC decision granting ExxonMobil enhanced powers to secure shareholder votes supporting management whilst curtailing activist investor influence.
These changes form part of Trump’s broader deregulation programme but risk undermining transparency that has historically attracted global investment to American markets, shareholder advocates warned.
“The US has long been known for its lower cost of capital, and I think that is down to its higher level of transparency and the ability of shareholders to go to court for remedies,” said John Coffee, Columbia Law School professor.
The SEC’s regulatory agenda includes shareholder proposal reforms designed to “reduce compliance burdens” for companies and a “rationalisation of disclosure practices”.
Amanda Fischer, policy director at Better Markets and former chief of staff to previous SEC chair Gary Gensler, told the Financial Times the administration was “more focused on protecting corporate management than empowering the actual owners of corporations”.
“Decades of shareholder rights are under threat due to a multipronged legal and regulatory assault,” Fischer added.
Industry experts anticipate the SEC will broadly target disclosure rules for elimination, particularly reporting requirements affecting smaller companies.
