Proxy Reform Proposal Clears House Committee

A bill re-introduced by Representative Bryan Steil (R-WI), titled the Protecting Americans' Retirement Savings From Politics Act, has cleared the House Financial Services Committee by a vote of 27-24. The bill would make several changes to securities laws, including most notably the following.

• Amends the Securities Exchange Act of 1934 to
  • provide for the registration of proxy advisory firms, including parameters of conduct and reporting requirements and liability for misstatements.
  • prohibit robovoting with respect to votes on proxy or consent solicitation materials, directs the Securities and Exchange Commission (SEC) to issue guidance, and prohibits outsourcing of voting decisions to entities that are not registered with the SEC or that do not have a fiduciary or best interest duty to the institutional investor.
• Amends the Investment Advisers Act of 1940 to
  • prescribe rules for proxy voting by an investment advisor of passively managed funds.
  • clarify that investment advice must be determined solely by pecuniary factors unless the customer provides informed consent for the consideration of non-pecuniary factors.

A previous version of the bill cleared the Committee in the 118th Congress but did not reach a floor vote in the House.