Rule changes for proxy voting advice businesses

In July 2022, the SEC voted to adopt amendments to the rules governing proxy voting advice businesses (PVABs). These amendments relieve regulatory burdens which impacted the timeliness and independence of the PVABs voting advice, while also clarifying the liability standards which are applicable to firms.

These amendments rescind two conditions which required a PVAB to rely upon exemptions to existing proxy rules information and filing requirements. Those conditions required that:

  1. Companies which are the subject of proxy voting advice to have advice made available to them in a timely manner; and
  2. Clients of PVABs were provided with a means of becoming aware of any written responses by the companies to a PVAB.

As a result, investment advisers who delegate their proxy voting obligations to a PVAB should be aware of the type of information a PVAB is considering when making a recommendation. As with any service provider, investment advisers should conduct regular due diligence on their PVABs to ensure that the voting advice is consistent with the adviser’s strategy and fiduciary duty. Advisers should also consider whether amendments to disclosure documents, such as Form ADV, are required in light of this change.

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