When the SEC held its roundtable on the proxy process in November, the National Association of Manufacturers applauded the Commission’s focus on the impact that proxy advisory firms can have on manufacturers and manufacturing workers. We also called for concrete steps toward effective reform and oversight of proxy firms. Today, the NAM submitted comments to the SEC outlining our proposed policy solutions to ensure that these unregulated firms do not continue to undermine the retirement security of millions of Americans.
The NAM’s proposed solutions are designed to address the issues that manufacturers have experienced in their interactions with proxy advisory firms. Notably, the firms have significant conflicts of interest, often issue reports that contain errors or misconceptions, develop one-size-fits-all recommendations, and refuse to productively engage with companies. The NAM comment letter submitted today provides the SEC with a regulatory path forward to make targeted reforms to protect Americans’ retirement savings; among other things, we call on the SEC to:
- Reinforce fund managers’ fiduciary duty to Main Street investors when relying on proxy firms’ advice;
- Provide guidance on how fund managers can ensure that proxy firms have policies and procedures in place to develop accurate recommendations and appropriately protect investors;
- Require proxy firms to undertake internal reform efforts to increase issuer engagement, improve transparency, reduce errors, move away from one-size-fits-all guidelines, and mitigate conflicts; and
- Institute effective oversight of proxy advisory firms.
If adopted, these commonsense reforms would reduce proxy firms’ outsized influence in the marketplace, enhance the quality of information available to investors, and underscore fund managers’ and proxy firms’ fiduciary duty to Main Street investors. As the SEC considers how best to regulate and oversee proxy advisory firms, the NAM will continue to give voice to the manufacturers and manufacturing workers who support concrete action and much-needed reform.
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