To amend the Securities Exchange Act of 1934 to provide for liability for certain failures to disclose material information in connection with proxy voting advice, and for other purposes.
Impact
If enacted, HB4590 will significantly enhance the legal framework surrounding proxy voting advice by establishing clear liabilities for misleading disclosures. This measure aims to bolster investor protection by ensuring that shareholders receive comprehensive insights into the factors influencing voting advice. Furthermore, it aims to discourage malpractice among advisory firms, thereby fostering a more trustworthy environment in corporate governance and shareholder engagement.
Summary
House Bill 4590 amends the Securities Exchange Act of 1934 to impose liability for failures to disclose material information related to proxy voting advice. The bill targets proxy voting advice businesses, requiring them to disclose their methodology, sources of information, and any conflicts of interest when providing recommendations to security holders about how to vote on particular matters. This change is intended to increase transparency and accountability in the proxy voting process, particularly emphasizing the accurate communication of essential information to investors and stakeholders.
Contention
While the intent of the bill is to promote greater disclosure and accountability, it may also face opposition from some proxy advisory firms who view these requirements as overly burdensome and potentially restrictive on their operations. Critics might argue that such liabilities could stifle competition and limit the availability of advisory services for smaller companies or individual investors. The balance between ensuring transparency and avoiding excessive regulatory pressure will likely be a key point of debate during the bill's consideration.
To amend the Securities Exchange Act of 1934 to require certain disclosures by institutional investment managers in connection with proxy advisory firms, and for other purposes.
To amend the Securities Exchange Act of 1934 to provide for duties of certain investment advisors, asset managers, and pension funds with respect to voting on shareholder proposals, and for other purposes.
To amend the Securities Exchange Act of 1934 to require the Securities and Exchange Commission to disclose and report on non-material disclosure mandates, and for other purposes.
Putting Investors First Act of 2023 This bill requires a proxy advisory firm to register with the Securities and Exchange Commission and prohibits an unregistered proxy advisory firm from using interstate commerce to provide proxy-voting advice, research, analysis, or recommendations to any client. With respect to these firms, the bill (1) establishes procedures for both registration and termination of registration; (2) requires each firm to employ an ombudsman, designate a compliance officer, and publicly disclose conflicts of interest; (3) allows issuers to assess and comment on proxy voting recommendations; and (4) prohibits unfair, coercive, or abusive practices. The bill establishes a private right of action against a proxy advisory firm that endorses an approved proposal that is not supported by the issuer and is found to be illegal.
To amend the Securities Exchange Act of 1934 to specify certain registration statement contents for emerging growth companies, to permit issuers to file draft registration statements with the Securities and Exchange Commission for confidential review, and for other purposes.
To direct the Secretary of State to take certain actions for the declassification and publication of materials relating to the Afghanistan withdrawal, and for other purposes.
To amend the Investment Advisers Act of 1940 to codify certain Securities and Exchange Commission no-action letters that exclude brokers and dealers compensated for certain research services from the definition of investment adviser, and for other purposes.
Supporting the current definition of materiality in the securities laws and opposing new disclosure requirements outside the core mission of the Securities and Exchange Commission.