We do not expect this bill to be enacted. It appears to be theater to prop up today’s proxy roundtable at the SEC. But it shows how powerful the forces are that are trying to eliminate the one independent source of information and guidance on proxy issues, proxy advisory firms.
Six U.S. senators introduced a bipartisan bill on Wednesday to put proxy advisors under the regulatory jurisdiction of the Securities and Exchange Commission.The Corporate Governance Fairness Act, co-sponsored by Democrats Jack Reed of Rhode Island, Doug Jones of Alabama, and Heidi Heitkamp of North Dakota as well as Republicans John Kennedy of Louisiana, David Perdue of Georgia, and Thom Tillis of North Carolina, is endorsed by the pro-business U.S. Chamber of Commerce as well as the Consumer Federation of America.
The bill puts the advice provided by proxy advisory firms under the Investment Advisers Act which is enforced by the SEC. The bill directs the SEC to conduct periodic inspections of firms such as Glass Lewis, Institutional Shareholder Services including reviews of potential conflicts of interests.