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Securities Regulation and Corporate Governance > Posts > SEC August 21 Open Meeting To Address Issues Related To Proxy Advisory Firms
SEC August 21 Open Meeting To Address Issues Related To Proxy Advisory Firms

The SEC announced that it will hold an open meeting on Wednesday, August 21, 2019 at 10:00 AM eastern time.  There are two matters on the agenda, available here, which, although not specifically referring to proxy advisory firms, appear to address reliance on voting recommendations issued by such firms, and the conditions such firms must satisfy to rely on an exemption from the proxy rules. 

The first agenda item is a Division of Investment Management matter captioned “Commission Guidance Regarding Proxy Voting Responsibilities of Investment Advisers.”  The SEC’s notice describes this matter as follows: 

The Commission will consider whether to publish guidance regarding the proxy voting responsibilities of investment advisers under Rule 206(4)-6 under the Investment Advisers Act of 1940, and Form N-1A, Form N-2, Form N-3, and Form N-CSR under the Investment Company Act of 1940.

The second agenda item is a Division of Corporation Finance matter captioned “Commission Interpretation and Guidance Regarding the Applicability of the Proxy Rules to Proxy Voting Advice.”  The notice describes this matter as follows: 

The Commission will consider whether to publish an interpretation and related guidance regarding the applicability of certain rules, which the Commission has promulgated under Section 14 of the Securities Exchange Act of 1934, to proxy voting advice.

This item appears related to the rulemaking addressed in the SEC’s most recent Reg Flex agenda, which stated that the Division of Corporation Finance “is considering recommending that the Commission propose rule amendments to address certain advisors’ reliance on the proxy solicitation exemptions in Rule 14a-2(b).” 

In November 2018, the Staff held a roundtable to provide an opportunity for market participants to address various aspects of the proxy process, including regulation of proxy advisors.  In February 2019, Chairman Clayton announced that Commissioner Elad Roisman would lead the SEC’s efforts to improve the proxy voting process and infrastructure.  The August 21 open meeting appears to be the next step in the SEC’s review of the proxy voting and proxy advisory firm process. 

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