On August 21, 2019, the Securities and Exchange Commission (the Commission) issued two releases (the Releases) regarding two elements of the proxy voting process that are influenced by proxy advisory firms: proxy voting advice issued by proxy advisors (available here) and proxy voting by investment advisers who use that proxy voting advice (available here). The guidance, in the words of Commissioner Elad L. Roisman, “reiterate[s] longstanding Commission rules and positions that remain applicable and very relevant in today's marketplace."
In the Releases, the Commission provided:
- a Commission interpretation that the provision of proxy voting advice by proxy advisory firms generally constitutes a “solicitation" under federal proxy rules and new Commission guidance about the availability of exemptions from the federal proxy rules and the applicability of the proxy anti-fraud rule to proxy voting advice; and
- new Commission guidance intended to facilitate investment advisers' compliance with the fiduciary duties owed to each client in connection with the exercise of investment advisers' proxy voting responsibilities, including in connection with their use of proxy advisory firms.
Notably, the Releases are not subject to notice and comment and will instead become effective upon publication in the Federal Register.We discuss the Releases in greater detail in our client alert (available here).
Thanks to associate Geoffrey Walter in Washington, D.C. for his assistance in preparing this summary and the related client update.