U.S. Chamber Calls for SEC to Examine Proxy Advisory Firm
Cites Lack of Transparency, Conflict of Interest in Letter to Agency
WASHINGTON D.C.—The U.S. Chamber of Commerce’s Center for Capital Markets Competitiveness (CCMC) asked today for the Securities Exchange Commission (SEC) to monitor the activities of San Francisco based proxy advisor Glass Lewis & Co. LLC and its owner, the Ontario Teachers Pension Board, who is an activist pension fund. In a letter to SEC Commissioner Mary Schapiro, CCMC cites an occurrence where the Ontario Teachers Pension Board’s opposition to the Board of Directors of New York Stock Exchange listed Canadian Pacific Railway Ltd was followed by the Ontario Teacher Pension Fund subsidiary Glass Lewis proxy advisory firm issuing a vote recommendation in the parents favor during the heated proxy contest earlier this month. Glass Lewis’ vote recommendation in favor of its parent company calls in question the role of proxy advisory firms in corporate governance, the lack of transparency by proxy advisory firms in making vote recommendations and the potential conflicts of interest that may benefit certain activist investment funds. The CCMC had alerted the SEC to a similar potential conflict of interest last year when the Ontario Teacher’s Pension Fund threatened McGraw Hill with a similar contest, but the issue was resolved before Glass Lewis issued a recommendation.
“A level playing is how capital markets and corporate governance works best,” said Tom Quaadman, vice president of CCMC. “Conflicts of interest by proxy advisory firms show that the system is out of whack. ‘Do as I say, not as I do’ is emblematic of a thumb on the scale that Congress and the SEC need to investigate. The SEC has been working on the concept release on proxy voting systems for two years but the conflicts of interests by proxy advisory firms have gotten a pass. The SEC needs to take a long hard objective look at this issue.”
The CCMC is highly concerned about the lack of transparency and tangible conflicts of interest in the operation of proxy advisory firms, and it has previously requested that the SEC exercise supervision in this area.
Since its inception in 2007, 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.