SEC Commission in Hedge Fund Alert

Date: Wednesday, January 24, 2007
Author: FTAlpha.ft.com

Short-termist activist hedge funds could gain undue influence on companies’ boards as a result of expected new rules allowing shareholders to vote on company directors, Paul Atkins, a commissioner at the SEC has warned. In a speech to company directors and corporate governance experts, Mr Atkins said that hedge funds’ ability to borrow and short-stock ahead of before crucial corporate meetings and use financial derivatives to own shares without having an economic interest in the company could lead to the appointment of “special interest directors”. The SEC in coming weeks is expected to revisit the issue of shareholder access to the company proxy, four years after an earlier attempt to allow such access failed.