Corporate Governance and Delaware Chief Justice Steele: The Miserable Failure of the Securities and Exchange Commission

by J. Robert Brown, for The Race to the Bottom, November 2, 2009.

We are discussing the recent interview with Myron Steele, the Chief Justice of the Delaware Supreme Court.  The interview be found here.

Chief Justice Steele was asked about the plans to increase the powers of the SEC, an extraordinarily vague question.  Presumably it referred mostly to the shareholder bill of rights, something that would indirectly allow the Commission to regulate governance practices through the use of listing standards.

His response was excoriating.

• Chief Justice Steele: The federal government is supposed to police disclosure and fraud on the market through the SEC. . . .The federal government’s answer today is to give the SEC, which failed miserably in those respects, more power to intrude into corporate governance and that balance between directors’ accountability and shareholders’ authority. It is the wrong answer and it is not the right time. The right answer is to let it play out until we at least have the empirical data to understand what ought to be done.

The Chief Justice mostly seems to be calling for delay pending the development of empirical evidence.  The point has no obvious connection to the SEC’s miserable failure…(continue reading)