At least one member of the Securities and Exchange Commission (SEC) wants to overhaul the proxy advisory industry that works with fundsters.

Sarah Lynch of Reuters reports that yesterday Republican commissioner Daniel Gallagher called on the regulatory agency to curtail mutual fund shops' and others' heavy reliance on proxy advisory shops like MSCI's Institutional Shareholder Services when casting corporate votes on behalf of investors.

"The last thing we should want is for investment advisers to adopt a mindset that leads to them blindly casting their votes in line with a proxy advisor's recommendations," Gallagher stated in a prepared speech in Seattle. "I believe that the Commission should fundamentally review the role and regulation of proxy advisory firms and explore possible reforms."

Galagher pointed to SEC rules adopted in 2003 and subsequent no-action letters prompted by proxy advisory shops.

The wire service does not mention where the other four commissioners stand on the issue. Yet it notes that Gallagher's push may nudge new chair Mary Jo White into examining the issue. 

Edited by: Neil Anderson, Managing Editor


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