Yesterday, the SEC announced an open Commission meeting next Wednesday – August 21st – during which it will consider two agenda items. The first relates to potential guidance “regarding the proxy voting responsibilities of investment advisers under Rule 206(4)-6 under the Investment Advisers Act.” With this agenda item, the SEC may be considering guidance that revisits the extent to which an asset manager can outsource voting decisions to proxy advisors consistent with its fiduciary obligations.
As this Gibson Dunn blog notes, the second agenda item also relates to proxy advisors:
The second agenda item is a Division of Corporation Finance matter captioned “Commission Interpretation and Guidance Regarding the Applicability of the Proxy Rules to Proxy Voting Advice.” The notice describes this matter as follows:
The Commission will consider whether to publish an interpretation and related guidance regarding the applicability of certain rules, which the Commission has promulgated under Section 14 of the Securities Exchange Act of 1934, to proxy voting advice.
This item appears related to the rulemaking addressed in the SEC’s most recent Reg Flex agenda, which stated that the Division of Corporation Finance “is considering recommending that the Commission propose rule amendments to address certain advisors’ reliance on the proxy solicitation exemptions in Rule 14a-2(b).”
As I wrote at the time the SEC updated its Reg Flex Agenda, it’s unclear exactly what the SEC is going to propose about the ability of proxy advisors to continue rely on exemptions from proxy solicitation rules. Some commenters have called for the SEC to reconsider those exemptions – or at least impose additional conditions upon their use – as part of a broader initiative to regulate the proxy advisory industry.
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These are controversial topics, so this should be an interesting meeting – well, I mean, if it goes forward. They seem to cancel these things with the same frequency as I cancel ‘Open Table’ reservations. We will be talking about the outcome of the SEC’s meeting at our “Proxy Disclosure Conference” coming up in a few weeks.
-John Jenkins, TheCorporateCounsel.net, August 14, 2019
