This month, the House Financial Services Committee hosted two hearings investigating the role and influence that proxy advisors play in investors’ decision making. Members questioned witnesses about the lack of transparency in the proxy advisory process and arrived at bipartisan agreement that a duopoly exists in the industry. The hearings were welcome after a recent about-face by the U.S. Securities and Exchange Commission (SEC) to rein in the power of proxy advisors, organizations for hire that offer voting recommendations to investor clients about a variety of issues that appear on company proxy statements.
After nearly a decade of debate, the SEC in July 2020 voted to adopt long-awaited amendments to its rules governing shareholder proxy solicitations. At the time, those rules were designed to ensure that clients of proxy voting advisory businesses would have reasonable and timely access to more transparent, accurate, and complete information on which to make voting decisions. The amendments would have facilitated the ability of those who use proxy voting advice, primarily institutional investors managing millions of individual’s assets, to make informed voting decisions without imposing costs and delays that could adversely affect the timely provision of proxy voting advice.
Read Full Article »