SEC Commissioner Elad Roisman recommended that the agency consider additional guidance for asset managers with respect to the use of proxy advisory firms.

In a keynote address at the ICI Mutual Funds and Investment Management Conference, Mr. Roisman stated that he has been studying several asset management practices with respect to the proxy process, such as:

  • the "default position" of many advisers, which is to vote every proxy in every fund's portfolio;
  • voting uniformly across funds;
  • how advisers handle conflicts of interest (i.e., conflicts that could exist between funds with different investment aims);
  • how asset managers are using proxy advisory firms to cast votes;
  • how advisers receive or account for input from issuers before voting proxies;
  • how asset managers are "diligencing proxy advisory firms' conflicts and becoming comfortable with their methodologies before utilizing their proxy recommendations and products"; and
  • whether industry demand could lead to better results from proxy advisory firms.

Separately, SEC Division of Investment Management (the "Division") Director Dalia Blass described long-term trends in the asset management industry, including the consolidation of small and mid-sized firms and its effect on investors. Ms. Blass called on regulators to refrain from "rewriting policy" as a first step in addressing the risks posed by such trends, and instead to focus on gathering evidence. Consistent with this approach, Ms. Blass stated, Division staff (i) began a new outreach initiative to acquire feedback regarding regulatory obstacles faced by small and mid-sized fund sponsors and (ii) are considering the creation of an asset management advisory committee.

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