exempted without endangering the public interest or the protection of investors so there is that exemption they're expected to be rather rarely exercise and certainly congress ought to keep an eye on what sort of exemptions  and if this bill would have passed for an auditor's as well what sarbanes oxley was enacted in two thousand and two congress was omitted from access to information sharing there's no clear reason why given the broad ranging powers to make rules as being necessary or appropriate the public interest was for the protection of investors this amendment in my view would further align those interests as we work to improve the regulatory functions in the capabilities of the piece and provide for greater investor protection it seems appropriate to enhance congressional oversight of the p c and allow for more information sharing between the congress and the board demler to what the f c c currently provides  five percent of broker dealers were inspected while only nine percent of over levon thousand federally registered investment advisors will be examined in two thousand and nine and two probably as you say is going to be exacerbated by the growth on several fronts on the authority and also by the number of voters there and i just know that in my experience in the back when i was pass legislation the one that i was back to mind is in the area early on people said authorize and regulations regarding shareholder proxy access candidates for our company's board of directors are almost always nominated by the very same management boards elected this is due in part to the high cost of the independent proxy solicitation necessary for shareholders to nominate board candidates under the current rules as a result shareholders have historically had no real voice in the board domination process little choice  voting and no effective means of holding the members of the board accountable today under the current holders can only express dissatisfaction with the board by withholding their votes in the election the only other alternative shareholders have is a highly expensive independent proxy solicitation therefore proxy access is necessary for shareholders to have a meaningful choice in exercising their right to vote for board members and thus to hold bo accountable inherently this amendment is largely supported by long term institutional shareholders they can to promote the long term health of the business this includes pension and retirement systems across the country directors risky and unfettered business ventures accordingly my minute is supported by california state teachers retirement system that is scouser california public employees retirement system cal pers the national association of shareholder and consumer attorneys american federation of state county and municipal employees washington state investment board colorado public employees retirement association and the state of wisconsin to investment board oregon public employees retirement and ohio public employees retirement system los angeles fire and police los angeles county employees retirement association new york state common retirement connecticut retirement plans and tr forth here whether the concept is sound or not is perhaps a different story but the states have already started to make changes ever since sarbanes oxley there's been a great change with respect to the election of directors of with respect to corporate law as well what i don't think we in this committee or in this congress should be doing is stepping in and starting to tell corporations exactly how they should elect directors or conduct other dollar and other states are doing for the model business corporation act and the number of states are looking at that at this point i believe that the primary focus of the f c c should be as it has always been to have investor protection of the safety and soundness of the financial markets and they should use a finite resources they had to protect investors not to monitor thousands of elections and public companies annually which is what this amendment would do these powers should be left to the states as it is now and also i think we should be looking at who would benefit from proxy access i believe that this amendment and other s c c actions could inadvertently empower special interests instead of individual busters to make important decisions these are electoral system is that the only way for shareholders to express dissatisfaction with the board is to withhold their vote in the election the only alternative is an independent  access to the proxy statement as it is right now very difficult for shareholders who are the ones who actually own these companies are the owners of capital to exercise their ability to directors who they have nominated  percentage that is necessary as well as we want to make sure these are long term shareholders that are not coming into the company in the short run trying to make some changes but are indeed long term shareholders concerned about the long term performance of these companies but under the system as it is right now it is often very difficult for the owners of capital to exercise the oversight necessary by the shareholders we should be bringing down the impediments to that of this amendment is i think a very meaningful step to empower shareholders to have control over their companies and i know folks talk about government intrusion in corporate governance but this is not at all government intrusion in corporate governance and it is empowering the very people who own these companies which are shareholders who are the shareholders are people who have for one k plans to have pension funds people who are investing in these companies for the long term and want to make sure the interests of those companies are aligned with their long term interest when they are displeased with the management or operation of a company the best way to express that this pleasure is through the board and currently it is too difficult to do that through the board and so i am in agreement with you on that i understand others aren't but i am  of one thing but but saying what threshold there are and when it's when it's available and how it's available and all that are the sorts of things i frankly think we shouldn't be leaving to the regulatory body and we should be giving them some more challenges in court could be met with this body has authorized to do that now the work that you contemplate doing along with mr peters i think certainly can be done i'm not be and leaving those details which are critically important to the regulatory authority at this point is just simply not the correct way to do it with respect for my colleague from california i oil been responsible for corporate governance in the united states american all of us on this legislation were injecting the proxy access clearly a corporate governance issue into a federal law so we are federalizing that night is sick we need to look more appreciate about the importance of deferring to the states and not having the federal government take over where was he when we were talking about preemption on the bank consumer protection apparently when it comes to off giving them more direction than just proxy access i would agree but i don't think it's a problem to just do that if joyce was to do nothing else then i would not be for this but this election majority voting more than seventy percent of the s and p five hundred companies have adopted majority voting and director elections but mr castle i think stated the whole essence of this when you when you start talking about the relationship a company and their management directors and shareholders corporate that has been traditionally a matter of state law opposed to doing anything at the federal level they would leave this to the states and i don't understand is this persons who understand that this is an interim measure not the final measure why you would not support this with the understanding that when you have the details if they are acceptable then we may support details it seems to me that to my friend that you've come up with what appears to be something that is needed at this time we all agree that there is a need for some intervention in this process the question is how do we do it meaningfully as possible and and  to be i thank the gentleman from texas my problem with the interim measure is this that i think there are other things that need to be along with it somebody mentioned majority tarion voting in my view proxy access is not as effective without that being a piece of it so there are other best that your legislation may not be agreeable to others as you might think why would we why would we magically assume that nothing is better than that something that is propose i agree with you the nothing that something is better than nothing i agree with that but i also the details are important but first there's other things other elements of corporate governance go on that's one thing i mentioned the second is the details the threshold that  your recognizing that you don't have one last time and because the time is up i absolutely am going to support this measure because as i see it while your intentions may be honorable you still have some work to do with some of the and you're on your on your points what have you but i just remember back a couple hours ago in this in this hearing as a general california had at piece of legislation with regard to corporate governance and i was up there at that time and i think the chairman turned to the other chairman and said we're going to have hearings later on on the whole issue of corporate governance and i think that gentleman did what he did just now which was yes and the chairman from esther's has said well maybe it would be appropriate to take up the whole larger issue of corporate governance at that time because that is a huge issue and a significant issue and we shouldn't be hitting just around the edges we should do it in a detailed and thoughtful manner and i understand the chairman's comment about well we can take something know that we just gave them today was not after more thought and what have you the direction that we wanted to give to them so i think i would go where the chairman was earlier mr kanjorski plan to have hearings on corporate governance let's use that as the time to bring up the matter that the gentleman from california had before the gentle lady from california which i may be actually this close on some points another point but i think there are some points as far as open it up because i get my statements in the mail too and wonder where is my where do i get my two signing whatever the various laws may be it has worked very very well in this country in a single state in the united states which is not have extensive corporate laws and they deal with the issues of proxy access and they understand there's a problem and the states are now dealing with that all of us on in this legislation were stepping in and doing something which may be more important than all the rest the legislation put together in terms of all of us on shifting corporate law from the state government to the federal government in the areas of this proxy access situation which is being resolved and i don't necessarily disagree with those who argue here a number of you have perhaps we have to do more to provide greater proxy access that's not asked me to be sure that this amendment is straightforward and creates an ombudsman at the security exchange commission the goal here is to encourage more open communication between the f c c and the individuals and entities subject to its regulation in order to promote better government asked for and i  critical that they in turn be able to demonstrate efficiency by achieving better resource allocation to manage systemic risk and adequate consumer protection and yet not become an operational burden on the companies and organizations they oversee and short as we expand the powers of many of our regulators it is reasonable that we ask them to become better and more responsive and focused and it matters to the stability of the overall financial system and to the continue competitiveness of american financial institutions and also missed a chance to i have had dialogue with a number of individuals and i would like to introduce a member with a commitment further to work with others to make sure that there will be a minor technical and it's acknowledging that this does not apply to member conduct member capital and discipline that agreement that we've had with a number that we're working on this yesterday during the debate on the private fund advisor registration you can expect an advisor to a private fund and know the answers to the underlying investors in the fun and even if  they did have such information requiring an advisor to comply with multiple and potentially conflicting multiple parties would be an impossible situation or th compensation because it's different broker dealer gets compensation based on commission had a best but advisers on those two are going to be treated in the exact same fashion when it comes to the investment advisers act and pretty straightforward in the questions about the constitutional ality of the closet governmental entity created by the public company accounting oversight board have abounded as everyone here knows and may the supreme court of united states agreed to hear a case challenging whether soccer violated the separation of powers doctrine by requiring that the f c c rather than the president with the consent of the senate appoint members to the p c a or b the court is scheduled to hear oral arguments on this case in december and plans to issue a ruling in this session that being the case and also the fact that arguably sarbanes oxley is the broadest most impactful finance reform congress has passed in decades and the last time this committee reviewed it or held a hearing on it was in two thousand and six many of us including myself were not on this committee or even in congress back in two thousand and six in fact eighteen republicans and twenty five democrats on this committee today were not a part of those hearings that led to that sweeping reform that's why mass that we take a hit a pause button here on this and also because of the burdens of section four zero four cost businesses far more than originally predicted many companies chose to delist from the american exchanges and then list instead on foreign exchanges just clear of stocks in fact eighty companies listed on the london stock exchange surveyed all five of those ninety percent claim that sarbanes oxley was the main reason why they listed in london rather than a new york and probably even more problematic there was a pattern of companies that simply chose not to go public at all to avoid compliance senate rather than being appointed by the s c believe that this is an address as important constitutional questions and as i mentioned previously the supreme court has taken up this question in which is not subject to constitutional sufficient control by the president its structure violates the doctrine of separation of powers and the appointments clause and it is my opinion i'm in agreement with  on her assessment that we need to take this carefully into consideration also i'm very concerned that the board lack of connection to the nerve center of law enforcement the executive has caused the board to regulate without coordinating with other agencies and this is a bipartisan concern that i have i am happy to put the power into the hands of the executive our current president to be able to make these appointments and that's essentially what two the f c c has exempted auditors of nonpublic broker dealers from the registration requirement at the end of last year that exemption was not extended and auditors of nonpublic broker dealers began registering with the p c here would include in the underlying bill would include all orders of every type of broker dealers including custodial clearing and introducing what my memet would do would exempt one of the exempt the orders of introducing brokers and dealers from broker dealers that actually control investor funds to have to subject themselves to p c o b process so if you adopt a language is currently drafted into line bill we would be expanding the number of orders under p c o b by almost twelve hundred which is more than double their current adding over seven hundred accounting firms to be inspection without any proponent being able to articulate a clear example of how this would ever stop the made up type situation  all small broker dealers to costly additional regulation without any benefits and what we're trying to do here is say let's focus on the people who really pose the rest so in short what we're saying is that those broker dealers who don't handle any money have not had situation broker dealers would have to go through the process of registration but there would be no activity to respond to it and that's what we're trying to pull out of this if there's no reason to register in the first place there's not going to be any enforcement because the kantian enforcement with regard to the funds involved if there aren't any funds involved and there's nothing on the balance sheet for anybody to even audit come in there's nothing there for them to say then why should we be requiring them to go through the whole process on general under the under and my bill will not change at all these firms introducing broker dealers will still continue to have to register with the f c c and and they will be able to do that will be somebody to check what they do because it will continue to be overseeing them as they do now there's nothing to audit they're saying there's nobody to overlook the auditor there's nothing to audit for a broker dealer who  because those funds don't appear on the balance sheet so you can you can look there right now there are two thousand firms registered with peace you want to add another twelve hundred we can close loopholes but if they're going to be  board p c o b which oversees auditors a public company the name has never been quite appropriate the board oversees the audit is a public companies but it does not perform accounting a public company so it doesn't do the a section six zero one of the investor protection act which you're now considering would require would require giving the p t o be the authority to register inspect and discipline the non broker dealers that we're just talking about so now the congress is expanding the g p c o b's jurisdiction  incorporating legislation to include entities that do and do not issue securities to public seems make sense to rename the p c o b from the public company accounting oversight board to simply the audit ing oversight board if that's what they do and that's wh