SEC Withdraws Proxy Advisory Letters

On September 13, 2018, the staff ("Staff") of the Division of Investment Management of the Securities and Exchange Commission ("SEC") withdrew letters previously issued in 2004 to Egan-Jones Proxy Services and Institutional Shareholder Services, Inc. ("ISS") under which the SEC had provided guidance on when an investment adviser could rely on a proxy advisory firm as an independent third party for purposes of making proxy voting decisions. This action by the Staff appears to be in response to the growing divide between public companies and proxy advisory firms due to public company concerns that two proxy advisory firms (ISS and Glass Lewis) have essentially cornered this market and as such have an overbearing influence on the voting process. Public companies and other interested observers have suggested that these firms are not held accountable for the conflicts of interest in their business of providing services to both investors and public companies, and that proxy