The Securities and Exchange Commission’s acting chief wants the agency to require clearer disclosures on how asset managers cast shareholder votes.
Acting Chairwoman Allison Herren Lee said in a Wednesday speech that disclosure rules have failed to help everyday investors understand how managers exercise those crucial votes for them.
With the rise of index funds, shareholder voting power is now heavily concentrated in the hands of a few firms. BlackRock Inc., Vanguard Group and other large managers can decide fates of companies by voting on corporate boards or issues such as business acquisitions. Many say they pay attention to environmental, social and governance matters when voting.
Still, these firms are required to disclose little to the SEC about how they vote all of the shares they oversee for investors.
Fund managers can give up voting rights if they have lent shares held on behalf of investors in exchange for fees. Many did so for GameStop Corp. a year ago, fueling short selling in the videogame retailer’s stock before a group of Reddit investors banded together to help drive a now infamous surge in the company’s shares.
