Senate Banking Committee Considers Reforms To Proxy Voting Process

Experts debated the role of proxy advisory firms and other shareholder voting issues before the U.S. Senate Committee on Banking, Housing and Community Affairs.

Former SEC Commissioner Daniel M. Gallagher advocated for "rein[ing] in" some of the proxy advisory firms' "unfettered power" in shareholder voting. He approved of the SEC's recent withdrawal of the 2004 Egan-Jones and ISS staff no-action letters ("2004 no-action letters") that had provided protection to investment advisers that use proxy advice in formulating their own voting. Mr. Gallagher urged the SEC to:

• revisit what he described as the "special and privileged role" accorded proxy advisers (a deference he described as similar to that granted to rating agencies before the market crash);