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January 11, 2006
A benign regulation that distracts from mischief
Inasmuch as I am critical of the SEC in this earlier post today, it's only fair to compliment the agency for one of its regulatory initiatives that could have a beneficial impact.
This NY Times article reviews the SEC's new proposed rules on disclosure of executive compensation, which -- even though the new rules address a problem that probably would not break the top 20 in current corporate governance problems -- could work to keep the SEC busy from pursuing more damaging regulatory actions. Larry Ribstein has the most insightful comments on the proposed new rules (here, here and here) and points out the possible mischief-saving nature of the SEC initiative:
By focusing on executive compensation disclosure, [SEC chairman] Cox manages to get a big pile of political capital from the pro-regulatory populists, while at the same time causing relatively little harm compared to many other things he could be doing. . . . .[D]isclosing executive compensation is probably . . . not going to be hugely costly. If it deters abuses, that's not so bad. Meanwhile, maybe Cox can use the political capital he gains from this move to meaningfully shrink regulation.
Posted by Tom at January 11, 2006 06:47 AM
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