FOR IMMEDIATE RELEASE
August 21, 2019
SEC Commission Guidance on Proxy Voting is Encouraging
The Institute for Pension Fund Integrity commends the SEC for moving towards greater clarity on the proxy voting requirements and fiduciary responsibility for institutional investors. However, more is needed.
Arlington, VA – The Securities and Exchange Commission (SEC) has been reviewing the role of proxy advisory firms and the processes surrounding proxy voting for more than a year. The action taken by the Commission at today’s meeting to issue formal guidance on the proxy voting responsibilities of investment advisers is an important first step toward providing clarity essential to fiduciaries. This official guidance is a welcomed first step in a process that will add necessary transparency and accountability.
Proxy advisory firms have an outsized influence on public pensions because fiduciaries feel an inherent mandate requiring them to vote every single proxy. Two proxy advisory firms, Institutional Investor Services (ISS) and Glass Lewis, control 97% of the proxy services market despite apparent conflicts of interest and lack of regulatory oversight. By reducing the requirement of institutional investors to vote every single proxy, proxy advisory firms and institutional investors, such as public pension funds, will be able to focus on shareholder resolutions that directly impact shareholder value, thereby benefiting all our public employees and retirees.
In response to this guidance, Institute for Pension Fund Integrity (IPFI) President, Christopher Burnham, commented, “Firm adherence to fiduciary responsibility was evident at today’s meeting, and it’s clear that it was the overarching factor in developing the Commission’s guidance.” Burnham continued, “the SEC is moving in the right direction on the proxy voting issue, and I’m encouraged by today’s comments from the Commission that we’ll see more action by the SEC through a rule change to provide further transparency in the opaque proxy advisory environment.”
IPFI continues to fight for strict adherence to fiduciary responsibility and to keep politics out of the management of public pension funds. Considering the latest research showing the underperformance of public pension funds, now more than ever, pensions need to focus on fiduciary responsibility and proxy voting that will enhance investment returns. Read more about the intersection of public pensions and proxy voting at www.ipfiusa.org.
The Institute for Pension Fund Integrity seeks to ensure that local, state and federal leaders are held responsible for their choices in investment, led not by political ideation and opinion but instead by fiduciary responsibility. IPFI is a non-partisan, non-profit organization based out of Arlington, Virginia, and spearheaded by former Connecticut State Treasurer and former Undersecretary General of the United Nations, Christopher B. Burnham.