NIRI, SCSGP Issue Recs on Proxy Advisory Firm Oversight

Throughout this article, found on ComplianceWeek, is discussed the measures the Securities Exchange Commission is taking in terms of tightening guidelines and increasing disclosure for proxy advisory firms. The proxy advisory firms that are being targeted are directly linked towards influencing how investors vote their shares.

Recently adopted is a requirement for all proxy advisor firms to register as investment advisers due to the discussion paper published by the National Investor Relations Institute as well as the Society of Corporate Secretaries & Governance Professionals. The basis of these requirements is to look closer at proxy mechanics and voting issues within the industry.

NIRI President and Chief Executive Jeff Morgan stated that a copy of the document regarding these issues has been filed and sent to the Securities Exchange Commission and hopes that the recommendations about the revolving issues will be discussed in the upcoming concept release.

In order to maintain guidelines and standards, it is vital that action is taken in regards to proxy advisers firms seeing how they remain highly unregulated and unsupervised. There needs to be an improvement in the aspects of standards, procedures, conflicts of interest, etc. These firms can have a large significance in terms of influence on director elections and corporations seeing how a majority of their pension funds and mutual fund clients typically have large stock holdings.

Due to changes in the New York Stock Exchange Rule 452, which has reduced influence of retail investors and the Investment Advisers Act of 1940, which proposes disclosing conflicts of interest, their have been positive movements in terms of strengthening and tightening guidelines and disclosure for proxy advisory firms.

It is quite evident, that corporations as well as proxy advisor firms have to efficiently and effectively follow the guidelines put in place by the SEC as well as NIRI. Investor Relations is only growing more rapidly as time progresses and rules and regulations are only getting stronger and more disclosure is becoming a norm. With the help and guidance of the SEC, NIRI, & SCSGP, it can only benefit firms by allowing for more accurate information and in a timely manner.