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"Matt disagrees with one of the conclusions drawn in the paper that shareholders have a perverse incentive to invest in companies that do bad things because the

by rsync 6y ago

"Matt disagrees with one of the conclusions drawn in the paper that shareholders have a perverse incentive to invest in companies that do bad things because they are compensated their loses when the stock goes down. He disagrees because their are compensated with money that the company has which already belongs to the shareholders." This may be a romantic notion that I misunderstand but isn't there a mechanism wherein I, an aggrieved (citizen/neighbor/bystander/victim) can buy a single share in a public company and then, as a shareholder, speak and/or protest at the annual meeting and cause all manner of discomfort, public reckoning, etc. Does that work the way I think it does or am I caught in some hollywood trope ?

Matticus_Rex 6y ago
It depends on the company. At many companies any number of shares entitles you to attend, though many companies set a minimum number of shares in their bylaws (I think public companies can only limit this to a maximum of 1000 shares, and IIRC nearly all publicly-traded companies set a limit to avoid single-share troublemakers). Speaking also depends on how the bylaws say the agenda is constructed, but I've never seen any where a share would entitle someone to a spot on the agenda. There are sometimes spaces for comment, and I think the rules for how those are selected/filtered are set in the bylaws.
deleted 6y ago
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yellowstuff 6y ago
> This may be a romantic notion that I misunderstand but isn't there a mechanism wherein I, an aggrieved (citizen/neighbor/bystander/victim) can buy a single share in a public company and then, as a shareholder, speak and/or protest at the annual meeting Yes. > and cause all manner of discomfort, public reckoning, No. The etiquette is to let people speak their piece while the board looks concerned, but as far as I know there have never been any actual consequences from this.
elliekelly 6y ago
It does and it doesn’t. Can you go to the shareholder meeting and speak? Sure. But your time will probably be limited and if you ask something contentious you’re likely to get a politicians non-answer. For anything more meaningful you would need to meet one of the three criteria of Exchange Act Rule 14a-8 which the SEC recently “modernized”.[1] It used to be a requirement that a shareholder own $2,000 or 1% of the outstanding shares in order to bring a proposal. The new Rule is you must own $2,000 or 1% of the outstanding shares for three or more years in order to bring a proposal. There’s also criteria for a shareholder to bring a proposal in a shorter amount of time if they own a higher dollar amount of shares but I believe the shortest time period under the new rule is one year. So one share probably isn’t going to cut it for most public companies other than AMZN and Berkshire Hathaway. And even if you meet the requirements to bring a shareholder proposal it would very likely require advanced notice which is a whole big thing. Especially if management doesn’t agree with whatever it is you’re trying to do. So I guess the answer is no, securities law is a lot more paperwork and a lot less exciting than in the movies. [1]https://www.sec.gov/news/press-release/2020-220 https://www.sec.gov/news/press-release/2020-220 Edit: It just occurred to me that your question about standing at a shareholder meeting is different from the topic of the article which is private lawsuits alleging securities fraud. Management’s duty is to the shareholders (collectively) so the “own one share” question doesn’t really apply the same way. You’d need to show that you purchased or sold the security in reliance on the fraudulent information (or undisclosed information).

by rsync 6y ago

Matticus_Rex 6y ago

It depends on the company. At many companies any number of shares entitles you to attend, though many companies set a minimum number of shares in their bylaws (I think public companies can only limit this to a maximum of 1000 shares, and IIRC nearly all publicly-traded companies set a limit to avoid single-share troublemakers). Speaking also depends on how the bylaws say the agenda is constructed, but I've never seen any where a share would entitle someone to a spot on the agenda. There are sometimes spaces for comment, and I think the rules for how those are selected/filtered are set in the bylaws.

deleted 6y ago

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yellowstuff 6y ago

> This may be a romantic notion that I misunderstand but isn't there a mechanism wherein I, an aggrieved (citizen/neighbor/bystander/victim) can buy a single share in a public company and then, as a shareholder, speak and/or protest at the annual meeting Yes. > and cause all manner of discomfort, public reckoning, No. The etiquette is to let people speak their piece while the board looks concerned, but as far as I know there have never been any actual consequences from this.

elliekelly 6y ago

It does and it doesn’t. Can you go to the shareholder meeting and speak? Sure. But your time will probably be limited and if you ask something contentious you’re likely to get a politicians non-answer. For anything more meaningful you would need to meet one of the three criteria of Exchange Act Rule 14a-8 which the SEC recently “modernized”.[1] It used to be a requirement that a shareholder own $2,000 or 1% of the outstanding shares in order to bring a proposal. The new Rule is you must own $2,000 or 1% of the outstanding shares for three or more years in order to bring a proposal. There’s also criteria for a shareholder to bring a proposal in a shorter amount of time if they own a higher dollar amount of shares but I believe the shortest time period under the new rule is one year. So one share probably isn’t going to cut it for most public companies other than AMZN and Berkshire Hathaway. And even if you meet the requirements to bring a shareholder proposal it would very likely require advanced notice which is a whole big thing. Especially if management doesn’t agree with whatever it is you’re trying to do. So I guess the answer is no, securities law is a lot more paperwork and a lot less exciting than in the movies. [1]https://www.sec.gov/news/press-release/2020-220 https://www.sec.gov/news/press-release/2020-220 Edit: It just occurred to me that your question about standing at a shareholder meeting is different from the topic of the article which is private lawsuits alleging securities fraud. Management’s duty is to the shareholders (collectively) so the “own one share” question doesn’t really apply the same way. You’d need to show that you purchased or sold the security in reliance on the fraudulent information (or undisclosed information).