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SEC Proposes Rule Amendments for Proxy Voting Advice

The United States Securities and Exchange Commission proposed new amendments to its rules governing proxy solicitations that, if adopted, would significantly modify the proxy disclosure and solicitation process.


One amendment would impose disclosure and other obligations on proxy advisors. The rules would require proxy advisors to specify the circumstances when a person who furnishes proxy voting advice will be deemed to be engaged in a solicitation subject to the proxy rules. It would also require proxy advisors to disclose material conflicts of interest in their proxy voting advice while providing the company with an opportunity to review and comment on their advice before it’s issued.

The proposal is aimed at enhancing the accuracy and transparency of the information that proxy voting advisories provide to investors, the SEC said in its release. The proposal will have a 60-day public comment period following its publication in the Federal Register.

The rules proposal comes just a few days after the Institutional Shareholder Services (ISS), a proxy advisory firm, filed a lawsuit against the SEC in response to the guidance it issued in August that was targeted at firms like ISS.

Read: SEC Provides Guidance on Proxy Voting Responsibilities

ISS is seeking “injunctive and declaratory relief” and contending that the proxy adviser release is unlawful, and its application should be enjoined. ISS claims the SEC’s determination that providing proxy advice is a “solicitation” is contrary to law, that the SEC failed to comply with the Administrative Procedures Act and that the views expressed in the release were arbitrary and capricious.

“After careful review of the August guidance, we are deeply concerned that it will be used or interpreted in a way that could impede our ability to deliver our data, research, and analyses in an independent and timely manner,” said ISS President & CEO, Gary Retelny. “We believe litigation to be necessary to prevent the chill of proxy advisers’ protected speech and to ensure the timeliness and independence of the advice that shareholders rely on to make decisions with regards to the governance of their publicly traded portfolio companies.”

About the Author

Brett Christie Bio Image

Brett Christie is a staff writer at WorldatWork.

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