Shareholders need real voice: SEC chief

By Rachelle Younglai

NEW YORK (Reuters) - The top U.S. securities regulator on Wednesday called on Corporate America to modernize its proxy voting practices to give shareholders a greater voice in governing the companies they own.

"It is imperative that our proxy voting process work," Securities and Exchange Commission Chairman Mary Schapiro told a Practising Law Institute securities conference in New York.

"The failure to reform the shareholder voting process in the past has, in my view, affected company and board responsiveness to shareholder concerns," Schapiro said.

Schapiro said her agency was eyeing the mechanics for shareholder voting and vowed to give shareholders an easier and cheaper way to nominate corporate directors.

Investors have long clamored for a way to influence the composition of the corporate board -- an issue known as proxy access. Those demands increased after the government used billions of dollars in taxpayer funds to prop up companies including insurer AIG (AIG.N) and Bank of America (BAC.N).

A key congressional committee helped further their cause on Wednesday by passing a bill to boost investor protections.

The House Financial Services Committee's bill affirms the SEC's authority to give shareholders proxy access, among other things. If the bill becomes law, the SEC would have a better chance of fending off lawsuits from businesses that contend proxy access is a matter of state law.

Currently, shareholders are able to nominate directors but can only do so through a proxy fight, which they contend is expensive and burdensome.