December 20, 2019
December 20, 2019 Vanessa Countryman Secretary, Securities and Exchange Commission 100 F Street NE Washington, DC 20549 File Number S7-22-19 Dear Ms. Countryman: Congratulations to you on your appointment to Secretary of the Commission. I commend the SEC on its recently released new rule regarding proxy advisory firms’ advice. This was an important distinction to make, but hopefully it was only the first step of many to curb the abuses of these firms. I first submitted comments to the SEC roundtable comment file last year, and I would like to reiterate a few of the points for your benefit, as well as add some new observations. I teach Public Safety at Parkway West Career and Technical Center, a vocational school serving 12 school districts in Allegheny County. As a public-school teacher, I do not have lucrative real estate and investment streams, so I will be dependent on my pension in retirement. Today, the Pennsylvania Public School Employees Retirement System (PSERS) is currently underfunded by tens of billions of dollars. This is likely due in part to the proxy advisory practices, which have been shown to return 43 percent less than the stock market average. Activist shareholders continue to seek to leverage the trillions of dollars public pension funds have under management to pressure companies to make investment decisions with environmental, social, and governance, or “ESG,” priorities in mind. I respect people who care about social issues such as civil rights. However, pension funds are not a vehicle with which an individual should promote personal political or social agendas. The one and only consideration should be financial performance. Anyone taking a step back from their political beliefs should realize this is clearly wrong. Pensions are for protecting the long-term security of retirees whom have served their communities admirably. They are not blank checks for quasi-political donations. But the least they could do is offer fresh “advice” each time. These firms repeatedly put forth the same shareholder proposals year after year, even if they fail to gain support, and they use tools like automatic voting and specialty reports to create a politically minded echo chamber that completely distorts corporate governance. Just two firms, Glass Lewis and Institutional Shareholder Services, control 97 percent of the proxy advisory market, which is problematic in terms of transparency, conflict of interests, investing redundancies, and pure power. With socially minded shareholder activism apparently being bolstered by proxy advisory firms, it is imperative for the SEC to ensure that proxy advisory firms act with investors’ financial interests in mind, not social activism. They must be held to the standards of a fiduciary to ensure that hard-working pensioners receive the retirement promised through a lifetime of work. I appreciate your consideration of these views, and I wish the SEC luck as it finalizes its new rules on proxy advisory firms. Sincerely, Ronald Baselj [redacted]