November 19, 2019


A recent CNN article about proposed new rules by the Securities and Exchange Commission (SEC) fails to provide readers a complete view of the facts.

The SEC rules in question would enact reforms that will provide oversight and transparency to proxy advisory firms. But that perspective isn’t included anywhere in CNN’s coverage. CNN did not contact us ahead of running the story, and after the story ran we held a call with them to correct the record. They were not receptive to the following details:

  • Two companies control 97% of the proxy advisory firm industry, making it a virtual duopoly, with no government oversight.
  • These companies have been allowed to operate with material undisclosed conflicts of interest. Some of them have a research and a consulting arm, where their findings may serve a hidden financial motive. And there are pension funds that have stakes in proxy advisory firms — where these firms advocate on matters that align with their owners’ interests — and these financial relationships are not always disclosed.
  • Proxy firms also attempt to impose opaque, one-size-fits-all voting recommendations, most of which are repeatedly rejected by the majority of shareholders because they are immaterial or unrelated to the health of the organization.
  • These special-interest-driven proposals lack the support of either the companies or investors, disrupting communication and derailing the important proxy process. This ultimately limits the ability of investors to make informed decisions.
  • As a result, the rise of advisory firms has coincided with a steep decline in the number of public companies in the United States. This decline has significant long-term implications, including fewer jobs and decreased financial opportunities for Main Street investors.

Instead, CNN’s one-sided article injects unsourced opinions and fails to provide a balanced look at the issue. It amplifies activist investor talking points and minimizes the way these firms harm the marketplace.

Here’s a closer look:

cnn markup



You can read our full statement here.

Readers deserve to be fully informed of all of the facts on this issue.