Statement on Adoption of Amendments to the Rules Governing Proxy Voting Advice

Today, the Commission will consider adopting amendments to the rules governing proxy voting advice. I am pleased to support these amendments because they address issues concerning the timeliness and independence of proxy voting advice, which would help to protect investors and facilitate shareholder democracy.

Institutional investors—and their investment advisers—often find it helpful to turn to specialized businesses called proxy advisory firms to provide them with voting recommendations concerning important corporate matters such as the election of directors, merger transactions, and shareholder proposals.

It is critical that investors who are the clients of these proxy advisory firms are able to receive independent and timely advice.

In 2020, the Commission adopted a rule that addressed several matters concerning proxy advisory firms. That rule provided important benefits for investors and market participants by improving disclosure of conflicts of interest in proxy advisory firms and expressly including proxy voting advice within the definition of a proxy solicitation so that the investor protections of the federal proxy rules extend to such advice.

We have, however, continued to hear from many investors that certain conditions in the 2020 rule might restrain independent proxy voting advice. Given those concerns, we have revisited certain conditions and determined that the risks they impose to the independence and timeliness of proxy voting advice are not justified by their informational benefits. Therefore, the rule before us today would repeal those conditions. Separately, other amendments would address potential risks of confusion regarding the application of liability to proxy voting advice that was unintentionally created by the 2020 rules while affirming that proxy voting advice is generally subject to liability under the proxy rules.

Based on feedback from the public, this rule will also rescind 2020 Commission guidance on the proxy voting responsibilities of investment advisers.

I’d like to thank the SEC staff for their work on these amendments, including:

• Renee Jones, Michele Anderson, Ted Yu, Valian Afshar, and Joseph Dilley in the Division of Corporation Finance;
• Dan Berkovitz, Michael Conley, Megan Barbero, Meridith Mitchell, Bryant Morris, Malou Huth, Tracey Hardin, Dorothy McCuaig, Natalie Shioji, Dan Matro, Cathy Ahn, and Lisa McCann in the Office of the General Counsel;
• Vlad Ivanov, Andrew Glickman, and Matthew Pacino in the Division of Economic and Risk Analysis;
• William Birdthistle, Nadya Roytblat, Rachel Loko, Terri Jordan, and Tara Varghese in the Division of Investment Management;
• Janene Smith in the Division of Enforcement; and
• David Fernandez in the Office of the Chair.