he ICI today said in a letter on its Web site
that it will support the SEC's proxy voting proposals if two changes are made to them.
The industry association said in a letter that if the changes become law "mutual fund shareholders will benefit from the highest, most rigorous proxy voting standards in the country." The ICI also proposed a new standard that would assign special proxy voting oversight responsibilities to independent fund directors. It explained that the requirement would add "another important protection."
"Together, these measures would reinforce an already effective system in which mutual funds have consistently fulfilled their responsibilities to shareholders. These new standards should also raise the bar for all other public and private institutional investors who may not be subject to this regulation but who vote millions of proxies on behalf of individuals."
The ICI does object to two elements of the SEC's initiative that it believes would harm fund shareholders. It argues that a requirement to file semi-annual reports on votes would "needlessly politicize mutual fund portfolio management." It also argues that the information is being sought mostly by special interest groups.
"They want proxy votes disclosed to further their social and political agendas, regardless of how much it hurts mutual fund shareholders. Special interest groups appear to view mutual funds as a prize to be captured as they single-mindedly pursue their narrow objectives," said the ICI.
It also believes that disclosure of the votes would weaken funds' ability to provide strong corporate governance by exposing their voting. It claims confidential voting improves corporate governance and promotes accountability.
"The SEC should strengthen confidential voting by expanding its reach instead of undermining it. This would be a singularly effective way to empower institutional investors and achieve the governance improvements the Commission is seeking. We pledge our strong support should the SEC choose to do so," read the letter.
Stay ahead of the news ... Sign up for our email alerts now