The bipartisan Senate bill pursues proxy advisory firm reform through three primary objectives:
- Require all proxy advisory firms to register as investment advisors under the Investment Advisors Act;
- Provide the SEC with “periodic and special” examination powers to review proxy advisory firm advice, conflicts of interest policies, and anything else the SEC “may prescribe as necessary and appropriate in the public interest and for the protection of investors;” and
- Require the SEC to submit a report to the Senate Banking Committee on proxy advisory firm conflicts of interest, policies aimed at avoiding “false statements” or omitting material facts, and whether additional protections are needed for investors.
Why does this matter? Proxy advisory firms are under pressure, with the introduction of the Senate bill plus the SEC’s proxy advisory firm roundtable. The Association’s Center On Executive Compensation is advocating on the Hill and at the SEC for the proxy advisory firm industry reforms we outlined in comments submitted to the SEC roundtable earlier this month.