The Securities and Exchange Commission
will delay rules making it easier for investors to oust corporate
directors, a step that may give banks a reprieve from shareholders
seeking retribution over the financial crisis.

SEC
Chairman Mary Schapiro has backed away from approving a rule this year
to let hedge funds, institutional investors and shareholder groups put
candidates on corporate proxy statements, Bloomberg News reported.

Commissioners
are unlikely to vote until 2010, meaning the provision won't be in
place for next year's board elections at companies such as Citigroup (C), sources told Bloomberg.

• Bing: Check the news on proxy rules

"This
gives the banks more breathing room," said James Cox, a Duke University
law professor. "They are still reeling from the credit meltdown. A year
from now, they may have more robust profits and that would certainly
dampen anxiety among their shareholders."

The SEC proposed its so-called proxy access rule in May, with Schapiro saying the billions of dollars of losses suffered by financial companies raised "serious questions" about the oversight performed by boards of directors.

A
final vote had been scheduled for November. The agency is planning a
delay to give its staff more time to review more than 500 comment
letters, many of which raise concerns about the proposal, Bloomberg
said.

"Not having proxy access in place in time for the
start of the 2010 proxy season is disappointing, but shareowners have
waited years," Amy Borrus, deputy director of the Council of
Institutional Investors, told Bloomberg.

The council represents pension funds and labor unions with assets under management exceeding $3 trillion.

SEC
spokesman John Nester declined to discuss the agency's timetable. "The
goal is to adopt an enduring rule that ensures investors can exercise
their rights over the long run."

Investor anger at financial companies peaked at this year's annual meetings. Bank of America (BAC) shareholders stripped CEO Ken Lewis of his chairman post in April after he was faulted over the bank's acquisition of Merrill Lynch. Lewis announced Wednesday that he would resign.

More
than 25% of Citigroup shareholders withheld votes for board members
John Deutch, who led the company's accounting and risk management
committee, and

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