U.S. Chamber Calls for Increased Transparency and Accountability at Proxy Advisory Firms

In Address, Hirschmann says Lack of Supervision Will Lead to Adverse Consequences for all Investors

NEW YORK, NY—At the annual Corporate Boardroom Summit today hosted by Corporate Board Member and NYSE Euronext, U.S. Chamber Center for Capital Markets Competiveness (CCMC) President and CEO David Hirschmann called on the SEC to review the practices of proxy advisory firms and take the necessary steps to hold the firms accountable and bring transparency to their processes.

“With the increased weight of the institutional investors vote and their reliance on proxy advisory firms, the lack of transparency, balance, and oversight of the firms is a troubling regulatory gap,” said Hirschmann to the audience of members of corporate and private boards. “Proxy Advisory Firms, such as ISS, have become the defacto regulators of corporate governance and yet they are not required to provide any of the transparency and due process followed by government regulators.”

CCMC is committed to advancing an effective and transparent corporate governance structure including the elimination of regulatory dead-zones, and gaps in regulatory coverage. To that end, in July, the Chamber called for reform of private organizations wielding quasi-governmental power, highlighting the lack of transparency and accountability surrounding these powerful, policy-making organizations, such as proxy advisory firms. The Chamber has advocated for the SEC to put in place the appropriate oversight to ensure the transparent development of voting policies and quality vote recommendations.

“Failure to establish rules of the road for proxy advisors will undermine corporate elections and annual shareholder meetings, which inevitably will harm investors and the economy,” said Hirschmann. “We also hope firms will recognize the important role they play in shaping the future of corporate governance and that they enact internal policies and processes to increase transparency and accountability.”

Since its inception three years ago, the Center for Capital Markets Competitiveness has led a bipartisan effort to modernize and strengthen the outmoded regulatory systems that have governed our capital markets. The CCMC is committed to working aggressively with the administration, Congress, and global leaders to implement reforms to strengthen the economy, restore investor confidence, and ensure well-functioning capital markets.

The U.S. Chamber of Commerce is the world’s largest business federation representing the interests of more than 3 million businesses of all sizes, sectors, and regions, as well as state and local chambers and industry associations.