US SIF Releases Statement on SEC Vote to Regulate Proxy Advisory Firms

This statement is US SIF's response to the Securities and Exchange Commission  final rule regulating proxy advisory firms.

WASHINGTON, D.C., July 22, 2020Today, the Securities and Exchange Commission voted 3-1 to finalize a rule to further regulate proxy advisory firms.  The rule codifies that furnishing proxy voting recommendations, research and analysis is considered to be engaging in a proxy solicitation, requiring substantial information and filing requirements. It also subjects proxy advisors to Rule 14a-9 liability for materially misleading statements or omissions.

Lisa Woll, CEO of US SIF: The Forum for Sustainable and Responsible Investment, made the following statement:

“Today's vote is a blow to the independence of research provided by proxy advisors to investors. The proxy advisor rule shifts power to corporate management and away from investors by allowing corporations to inappropriately influence proxy voting advice and intimidate proxy advisors with the threat of litigation.

The rule will make it more difficult, expensive and time-consuming for proxy advisors to produce their research. The rule will not help institutional investors get higher quality information and thus serve their clients better. Rather it compromises the independence of an important data source. 

The members of US SIF take seriously their obligation to vote shares in a thoughtful and informed manner, consistent with their fiduciary responsibilities to their investors. Proxy advisors provide a high level of independent analysis on the myriad issues that must be voted on at the thousands of annual shareholder meetings."