Securities and Exchange Commission (SEC) Chairman Gary Gensler announced that he is he is directing the SEC to revisit the amendments to its federal proxy rules that it passed last July.
“In particular,” Gensler said in a statement, “the staff should consider whether to recommend that the Commission revisit its 2020 codification of the definition of solicitation as encompassing proxy voting advice, the 2019 Interpretation and Guidance regarding that definition, and the conditions on exemptions from the information and filing requirements in the 2020 Rule Amendments, among other matters.”
The edict comes on the heels of an announcement by the SEC in March that it would not enforce the new proxy rules.
The amendments passed last year exempt persons furnishing proxy voting advice from the information and filing requirements of the federal poxy rules and amended its definition of “solicitation” to include proxy voting advice, with certain exceptions. The changes further provide illustrative examples to the proxy rules’ anti-fraud provision.
At the time of the passing of the amendments, the SEC put conditions on the availability of two exemptions from certain of the federal proxy rules often used by proxy voting advice businesses with respect to conflicts of interest disclosure requirements. The SEC said the exemptions are designed to ensure that registrants receive proxy voting advice in a timely manner and are provided with an efficient and timely means of becoming aware of any written responses by registrants to such advice.
However, the Investment Adviser Association (IAA) panned the rule amendments, telling PLANADVISER in a statement that they are “bad policy.”
Karen Barr, president and CEO of IAA, said, “While the final proxy voting rules and new guidance adopted by the SEC have been modified from the initial proposal in response to widespread criticism—including from the IAA—we continue to believe that the SEC’s actions represent a major step backwards for corporate governance and will make it more difficult for investment advisers to use the services of proxy advisory firms to fulfill their proxy voting responsibilities on behalf of their clients.”
Gary Retelny, president and CEO of Institutional Shareholder Services (ISS), parent company of PLANAVISER magazine, echoed that sentiment, saying, “While the rules may appear less draconian than originally envisioned, they nevertheless serve as a blow to institutional investors seeking to judiciously monitor portfolio companies. Despite seemingly reducing the previously contemplated burden on proxy advisers, the new rules, coupled with the new guidance for investment advisers, will hinder investors’ ability to vote in a timely, cost-effective, and objective manner.”