investing

Do investors win with the Dodd-Frank Act?

Proxy access for shareholders
Proxy access for shareholders

The act gives the SEC the authority to give shareholders proxy access, or the ability to nominate the board of directors.

Based on the SEC proposals from last year, there will likely be a required percentage of shares owned in order to get proxy access, says Schlegel.

Though there are many unknowns about how things will shake out, one unknown has the potential to give small investors more influence in how corporations are run.

"There is a question of whether the SEC will allow shareholders to band together to get to that (ownership threshold)," Schlegel says.

"Directors choose the management of the company and they are looking out for the shareholders' best interest. Shareholders are a dispersed group, whether individual or institutional, so they need a voice as owners of the company. The board of directors is supposed to be that voice," says Schlegel.

But the people who land on corporate boards aren't typically watchdog types.

"It's a very closed community and tends to be an old-boy network," Schlegel says.

Allowing proxy access to those outside the club could allow shareholders to elect board members who will really look out for their best interests.

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