Putting Investors First Act of 2023
The bill also mandates that investment advisors, asset managers, and pension funds with considerable assets under management disclose how they use proxy advisory services in their voting decisions. This includes reporting on the adherence to recommendations made by these advisory firms and explaining how such recommendations align with the fiduciary duties owed to their clients. The goal is to improve the economic interests and transparency for investors as they interact with these advisory services.
SB1799, known as the 'Putting Investors First Act of 2023', is designed to amend the Securities Exchange Act of 1934 by establishing a registration requirement for proxy advisory firms. This legislation seeks to enhance transparency and accountability in the operations of these firms, which provide voting advice to investors. Under this bill, proxy advisory firms are obliged to register with the Securities and Exchange Commission (SEC), offering a foundation for regulatory oversight in the proxy advisory industry.
Overall, the implementation of SB1799 could reshape the dynamics between investors and proxy advisory firms, strengthen the integrity of the voting process, and enhance investor confidence in the advisement received. As the bill progresses through the legislative process, careful evaluation will be necessary to balance regulatory oversight with the preservation of shareholder rights.
A point of contention in discussions surrounding SB1799 is its potential impact on shareholder proposals. By tightening the processes through which shareholder proposals are evaluated and voted upon, including raising thresholds for resubmission of such proposals, critics argue that the bill may limit the ability of shareholders to voice their opinions and influence corporate governance. Supporters, however, assert that this will prevent frivolous proposals from burdening companies, ensuring that attention is directed to more significant governance issues.