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December 15, 2021

Better Markets Letter Supports Disclosure of Proxy Voting by Registered Investment Companies

Better Markets filed a comment letter with the U.S. Securities and Exchange Commission in response to the Commission’s proposal to enhance the disclosures by registered investment companies of how they vote their proxies. It would also implement Section 14A(d) of the Securities Exchange Act of 1934 (“Exchange Act”), which was added by Section 951 of the Dodd-Frank Act. Section 14A(d) requires that institutional investment managers disclose how they vote proxies related to executive compensation matters.

Why It Matters: Corporate suffrage is a one of the most fundamental shareholder rights, largely created under state corporate law and a company’s own policies but also recognized in the Exchange Act and the federal framework for regulating the U.S. securities markets. Meaningful exercise of corporate suffrage can help ensure that boards and management are accountable to shareholders and, to an extent, other stakeholders. In addition, shareholders’ right to vote not only on the selection of board members but also on the adoption of major corporate policies can help ensure that shareholders have a voice in corporate strategies and provide input on executive compensation.

What We Said: A provision of the Exchange Act, which was added by the Dodd-Frank Act after the 2008 financial crisis, requires that, “[e]very institutional investment manager subject” to Section 13(f) of the Exchange Act “report at least annually how it voted on any shareholder vote on executive compensation matters.” The SEC must require that institutional investment managers comply with the rule as proposed, without regulatory exemptions or carve-outs.  Additionally, the Commission’s proposed amendments to Form N-PX will improve its usability for investors and the public.

Bottom Line: We urge the Securities and Exchange Commission to move expeditiously to finalize the proposed rules, and we encourage the Commission to resist industry pressure to alter the scope of the Exchange Act’s requirements in a way that would subvert Congress’ well-considered mandate.

Read our Press Release here.  See the full Report here or click the button below.

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