Statement by Three Former SEC General Counsels on a Recent Academic Paper Discussing the Obligations of Both Public Companies and Proponents of Shareholder Proposals to Adhere to SEC’s Proxy Antifraud Rules

“We are three former General Counsel of the U.S. Securities and Exchange Commission who have reviewed the recent academic paper posted by Commissioner Gallagher and Professor Grundfest discussing the obligations of both public companies and proponents of shareholder proposals independently to comply with the SEC’s proxy antifraud rules (http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2536586).

“We are in substantial agreement with the Paper’s analysis of the obligations of shareholder proponents, and their application to past proposals. Indeed, we believe the Paper performs a necessary public service by appropriately putting shareholder proponents on notice should they engage in future activities similar to the ones the Paper found wanting.

“We also believe it is important to observe that, over the years, countless sitting SEC Chairs and Commissioners have expressed their individual views about the legal or policy implications of specific ongoing activities. This situation is no different. There have been some suggestions that Commissioner Gallagher's co-authorship of the Paper was inconsistent with SEC ethics regulations or was somehow inappropriate for a sitting Commissioner. Those suggestions are entirely without merit.”

Brian Cartwright
SEC General Counsel under Chairman Christopher Cox, 2006-2009

Simon Lorne
SEC General Counsel under Chairman Arthur Levitt, 1993-1996

Harvey Pitt
SEC General Counsel under Chairmen Ray Garrett, Jr., Roderick Hills and Harold Williams, 1975-1978