Jim McRitchie’s Letter to the New SEC Chair, Gary Gensler

Jim McRitchie has written to incoming SEC Chairman Gary Gensler with a list of suggested priorities. An excerpt:

With your knowledge of blockchains, you are in a perfect position to reconnect the link between shares, ownership, and responsibilities lost in disintermediation. One study found sixteen intermediaries between a Main Street investor and their investments (What They Do With Your Money, p. 3).

The SEC should facilitate deeper ties between shareholders/beneficial owners and the companies we invest with and in.

While proxy plumbing and disintermediation are essential to any such effort, a much easier and more impactful step would be to require N-PX reporting forms to be data-tagged. Main Street investors could then compare fund proxy voting records. Employers provide information on funds available to their employees through 401(k) and other investment plans. That information focuses on historical returns and fees. The most common investment choices in most plans are usually index funds, which now have more assets than actively managed funds. Returns and costs for indexed funds are similar for funds modeling the same index.

What neither employers nor most investment advisors provide is any information on fund voting records. That information must be extracted by a combination of computers using artificial intelligence and manual labor. N-N-PX  reporting in an easily tabulated and compared format would foster analysis such as Proxy Voting Adds Some Spice to Plain-Vanilla Index Investing and The Party Structure of Mutual Funds.

Professor Gensler: Unsolicited Advice – Corporate Governance

We endorse McRitchie’s suggestions and hope that Chairman Gensler will quickly turn the Commission’s attention to repealing the proxy advisory and shareholder proposal rules pushed through in a rush at the end of the Trump administration.

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