Congress Pressures Proxy Advisory Firms for Enhanced Transparency

On May 9, 2018, six Senators on the Banking, Housing and Urban Affairs Committee sent letters to ISS and Glass Lewis, following two Government Accountability Office investigations of the proxy advisory industry. The letters sought responses by May 30 to questions regarding the eligibility of their voting systems for exemption from SEC proxy rules, report accuracy and disclosures of conflicts of interest. The Senators’ questions echo the concerns discussed in the Corporate Governance Reform and Transparency Act of 2017 passed in the House of Representatives last December, which would require registration of proxy advisory firms with the SEC, disclosure of proxy firms’ potential conflicts of interest and codes of ethics, and disclosure of methodologies for formulating proxy recommendations.