Forum participants are encouraged to comment on the Broadridge advocacy of regulatory support for their "Investor Network" version of a "shareholder forum," reported below and in a previous article. Views based on experience from the past eleven years of Shareholder Forum programs will be useful to the SEC, as well as to the Forum itself, in considering how any "shareholder forum" can most effectively serve investor interests.

[The Forum subsequently submitted its responsive comments to the SEC.]

For the Broadridge statements on which both the new and previous articles are based, see:

Note: Broadridge was one of the companies that provided invited leadership support of the Shareholder Forum's public interest program to develop standards for electronic communications relating to shareholder meetings.

Broadridge to SEC: Mandate Use of Social Media

December 8, 2010
Chris Kentouris

Broadridge Financial Solutions, the largest world’s largest proxy distribution and voting firm, has called on the Securities and Exchange Commission to require public firms to use social media technology to communicate with their shareholders.

“Some believe we can wait and see,” said Richard Daly, Broadridge’s chief executive in a speech at a conference held by Hofstra University’s Frank Zarb School of Business on December 1. “They believe these developments, if they have merit, will take hold by themselves. But the truth is that changing the paradigm rapidly for all investors will require regulatory support.”

Citing statistics that retail voting declined from 20 per cent four years ago to less than five per cent in 2010, Daly said, “Reduced participation in key governance issues is coming at a time when the need for two-way communication with shareholders is dramatically increasing.”

Daly’s comments come amidst the Securities and Exchange Commission’s attempt to raise retail participation in shareholder meetings and reform so-called proxy plumbing.

According to Daly, the technology underpinning social media can provide knowledge transfer, voting participation opportunities, and transparency between shareholders, boards, management, and regulators at levels that could prevent many of the financial mishaps over the past decade.

“A true Investor social network could both prevent these mishaps and raise investor confidence,” he said.

Broadridge has a vested economic interest in promoting electronic social forums. After January 2008, when the SEC adopted new rules under the Securities Exchange Act of 1934 to ”facilitate the use of electronic shareholder forums by public companies and their shareholders, Broadridge developed its proprietary Investor Network.

The firm defines its service, launched in October 2008, as an “online community where investors and corporations come together to share information, ideas and perspectives.”

Daly and other Broadridge officials were unavailable for further comment about the speech or further details on the Investor Network. Therefore, it cannot be determined just how many US companies have used the Investor Network or what fee Broadridge charges.

Broadridge acknowledges that investors must remain anonymous and Broadridge does validate who they are online.

Here is how Investor Network service works: While anyone can view information on the site, to contribute their viewpoints investors must provide their online account ID and password they use to access their brokerage account.

They must also agree to a detailed disclaimer. Once verified as investors, each shareholder is given his or her own page under a pseudonym showing which companies’ stocks they hold in their portfolio, along with an indication of how many shares they own. They can then post comments in discussions about those companies, as well as companies whose securities they do not own.