[ by Howard Haykin ]

The Securities and Exchange Commission, self-proclaimed "The Investor's Advocate,"  has an extraordinary opportunity to demonstrate real-time securities regulation in the United States.  As Melanie Gretchen reports in today's Who's News - see JPMorgan Faces Proposal to Break Up the Bank - four of the nation's largest financial institutions have requested permission from the SEC to quash shareholder proposals and exclude them from the proxy ballot at their respective annual shareholders meetings. 

Open for Debate.   Institutional shareholders representing U.S. labor unions have asked the Boards of JPMorgan Chase, Bank of America, Citigroup, and Morgan Stanley to consider measures for enhancing shareholder value.  These institutional shareholders further suggest that all shareholders be asked to vote, essentially, on this one common proposal:  break up the banks, because each has grown too large to be effectively managed.  

JPMorgan has challenged its shareholders' proposal on a couple of fronts.  First, bank lawyers say that SEC rules provide that the proposal may be excluded from a shareholder vote because it concerns ordinary company business.  JPMorgan lawyers further note that the proposal contains "false and misleading" statements, and is "vague and indefinite."

Not possessing a legal background, but being well-versed in compliance issues, it would appear that if securities laws were crystal clear on this issue, the banks would not be in the position they are in now - i.e., seeking SEC permission.  They simply would have acknowledged receipt of the proposals, then sat on them.

Opportunity for SEC.    With the SEC deliberating the four similar requests, it would make imminent sense for the Commission to let the American public observe a topical question that directly impacts on their investments.  It also enables them to observe "the democracy of securities regulation" in action. 

It shouldn't be relevant whether the SEC Commissioners decide in favor of the shareholders or in favor of the banks.  What's important is that the public witnesses a public airing of this increasingly pertinent question and understand that conclusions can be reached based on objective reasoning and not just because the system is slanted in favor of the financial industry.

A public airing would further demonstrate how far this country has come - or not come - in terms of providing investors with real and relevant options, like giving appropriate representatives a voice in corporate forums.

Closing.   In New York, some would say these comments plus $2.25 would get a person into the subway.  I'd probably thank that person for his or her  thoughts - after all, they could have simply ignored me.  And, I would add that, if the SEC ever wanted to showcase itself, there are few situations that are better suited than now.

Given the importance of this issue - and its growing interest among shareholders throughout the country - perhaps the SEC would agree to place the debate on a pedestal for all to see.  After all, it's no secret the SEC 's #1 priority is in protecting investors:

"The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation."