What Does The Dodd-Frank Act Mean for IROs?
By Natalie Sabia (New York City)
What does the Dodd-Frank Bill mean to you? That’s the million dollar question that is being asked in every conversation centered on the economy. The 2,300 page bill that was recently passed, introduces the largest wave of changes in financial regulation since the turn taken after the Great Depression in 1930. It will enforce new rules among banks and financial institutions. No matter what side if the bill you’re on, it will continue to spark all angles of opinions and controversy.
The New York chapter of the National Investor Relations Institute (NIRI-NY) in cooperation with the Robert Zicklin Center for Corporate Integrity at Baruch College held a special session to discuss the Dodd-Frank bill and its provisions including issues on corporate governance, proxy access and executive compensation. The audience included investor relations personal, teachers, lawyers and representatives from financial firms.
Speaking on a panel was Clarke D. Camper, NYSE, Carol Stubblefield, Baker & McKenzie and John Yetter, NASDAQ. They made comments and took sides on several issues circling around the news of the reform bill. One of the consistent points they addressed was the fact that we won’t see any implications of this bill for several years. With 520 new rules to implement, including 205 that the SEC has to issue, it will be a long time before we see the full standpoint.
Named after Sen. Christopher Dodd and Rep. Barney Frank, topics of discussion included Board leadership, executive pay provisions and proxy access. “NYSE supported the bill from start to finish,” said Camper. We know it’s not perfect, but we think it’s good for banks.
Carol Stubblefield argued that the bill is not detailed and missing a lot of information. Details such as how will the executive pay be positioned when stock is incorporated in their bonuses have not been finalized. There were also strong feelings that the specifics in this bill don’t equal any actual significant changes. Closing comments dealt with the fact that no matter how long the reform takes, corporations will have to be more coordinated on all fronts, whether its pay, proxy or corporate disclosure.
Depending upon how you look at it, this bill represents a milestone in financial reform. Some Republicans argue the bill creates a more intrusive government and fails to prevent future bail-outs of financial companies, while Washington believes that this is a win for consumer protection. Seeking Alpha reports, “80% of those surveyed by Bloomberg say they have little or no confidence the bill will prevent or even soften a future financial crisis.”
According to the panel, a majority of financial companies have already communicated their comments regarding the bill. They advised to start talking to your legal group and take proper steps to communicate to your investors. The best thing to do now is figure out the implication details and get involved.
