Sullivan & Cromwell, Along With Other Firms, Submits Additional Comments to the SEC on its Proxy Access Proposal

January 19, 2010

On January 19, Sullivan & Cromwell and six other law firms submitted a letter to the SEC in response to its releases titled, “Facilitating Shareholder Director Nominations.” The letter discussed the two principal forms of private ordering for shareholders that are the current subject of debate, the “opt-in” and the “opt-out” alternatives, and recommended the inclusion of a “two-way opt-out.” The “two-way opt-out” would permit shareholders to adopt either more or less restrictive provisions, including an alternative regime or a complete exemption. The letter addressed why the final rule should include the “two-way opt-out” and provided advice on how to implement it. The commentary served as a follow-up to the letter dated August 17, 2009, which recommended that shareholders should have the opportunity to modify or “opt-out” entirely from the SEC’s proposed proxy access rules. In addition, James Morphy was on the drafting committee of a letter that provided similar recommendations on the subject, submitted to the SEC by the Committee on Federal Regulation of Securities of the Business Law Section of the American Bar Association.