Chair White Suggests SEC May Act to Limit Fee Shifting Bylaws

March 27, 2015

Also in her speech at the Corporate Law Institute, SEC Chair White addressed the debate over bylaw provisions that shift company litigation expenses to shareholders that bring and lose a claim against the company and its directors and officers, known as fee-shifting bylaws. Currently, the SEC has focused on whether a company’s disclosure about the existence and implications of any such provision is adequate. However, Chair White expressed her ultimate concern about company actions that could “inappropriately stifle shareholders’ ability to seek redress under the federal securities laws.” According to Chair White, “If the [SEC] comes to believe that these provisions improperly hinder shareholders’ exercise of their rights, it may need to weigh in more directly in this discussion.”

View All Ticker Posts