IR weekly April 21, 2009
signs of a start to an economic recovery. Market activity followed those economic indicators as well, as President Obama continues to serve as head cheerleader and calls what he sees as “glimmers of hope” in our economy.
Over the last few weeks, much of the content of my weekly message to you has been narrowly focused on the activity at the SEC rather than broader financial regulatory reform. I’d like to give you an update on this. Congress’ upcoming five-week session prior to Memorial Day is a critical time on the legislative calendar as it presents an opportunity for committee work to come to the floor before recess. Will we see any financial reform legislation on the agenda? I am told maybe, but unlikely.
Financial regulatory reform is high on the agenda of both the Obama administration and Congress. From what I am hearing in D.C., the Senate and the House of Representatives are taking two different approaches and reaching a consensus is challenging. Some believe it is best to deal with systemic risk first and the creation of a super regulator. Others believe that it is better to have an overall regulatory framework in place and then deal with details. Regardless, I am hearing that it may be after Memorial Day before we begin to see proposals move forward for a vote. I sense some frustration by the Obama administration with the legislative process, and in a rare move, Senator Chris Dodd and Congressman Barney Frank issued a joint letter (pdf) to President Obama promising action this year. So you may say, “As an IR professional, why does this matter to me?”
The evolution of financial reform does matter to IR, and it is something that NIRI will continue to help decipher for you as it progresses. This past week I spent time at the NYSE and in a meeting with NYS E Euronext CEO Duncan Neiderauer and heard the same message of the importance of financial reform for issuers. For example, one of the sticking points for discussion will likely be which type of regulation works best – “rules based regulation” or “principles based regulation?” The decision may have a dramatic impact on, for example, the fate of IFRS and GAAP accounting. GAAP is rules based and IFRS is principles based. No one can accurately predict the outcomes of financial reform, but the result will likely mean IR must continue to evolve in concert with the broader regulatory reform. So I believe it is important for all of us to stay abreast of the changing regulation and begin to prepare now.
Finally, you should know that last week the NYSE filed a proposal with the SEC to change section 202.06 of its manual to allow companies to comply with its immediate release policy by disseminating information by any Reg FD compliant method. NYSE-listed companies should read the proposal (pdf) which provides important background, rationale and additional detail.
