Press Release – Submission to the SEC: The Proxy Voting Process Requires More Transparency

 

FOR IMMEDIATE RELEASE
November 12, 2018

Press Release – Submission to the SEC: The Proxy Voting Process Requires More Transparency 

Ahead of the SEC roundtable this week, the Institute for Pension Fund Integrity releases a white paper on the need for greater transparency in the proxy voting process to better serve public pension retirees and taxpayers

Arlington, VA (November 12, 2018) The Institute for Pension Fund Integrity (IPFI) has submitted public commentary on the need for greater transparency and accountability in the proxy voting process, as the U.S. Securities and Exchange Commission (SEC) hosts a roundtable to discuss the proxy voting process this week. The added transparency is a critical need for public pension retirees who rely on pension fund managers to make the right decisions in these votes – and not to use them for political purposes.

The SEC is seeking possible reforms to the proxy voting process in part because of the tremendous market power that large, institutional investors, including public pension funds, hold. The current structure cuts individual and passive investors out of the process. Additionally, another large problem is that two firms control 97% of the proxy advisory market, which these large institutional investors use to help guide decisions on shareholder proposals. This leaves the door wide open for conflicts of interest.

With proper proxy voting reform, policy makers can restore balance to the shareholder voting process, increase overall transparency, and ensure that the individual investor’s voice is not overshadowed by the potentially-misguided political motivations of fund managers and other institutional forces.

IPFI calls on the SEC to implement new policies so that proxy advisors are required to adhere to their fiduciary responsibility with counsel and register with the SEC, disclosing possible conflicts. Likewise, increased accountability, including the ability for companies to identify and mediate clear inaccuracies prior to institutional investors review, should be requisite.

Reforming the proxy voting process would put more power into the hands of the actual pensioners, increase transparency, and help ensure that pension fund managers fulfill their true fiduciary responsibility—the highest return at a reasonable risk.

Christopher Burnham, IPFI President and former Connecticut State Treasurer explained, “As the true owners of large pension funds, pensioners deserve complete transparency to know the details of the shareholder proposals and to have their voices heard as the ultimate shareholders in many of these large companies.”

If the SEC reforms the proxy voting process to add greater transparency and accountability, it would be an important step to keeping politics out of the management of public pensions.

To read more about the current state of the proxy voting process and recommendations for increased transparency and accountability in the process, please read the IPFI commentary: http://ipfiusa.org/2018/11/12/ipfi-issue-brief-proxy-voting-and-public-pensions/

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 Christopher B. Burnham.