The SEC will now solicit public comment on the proposed rule, which would require mutual funds and other registered investment advisers to provide investors with a record of proxy votes along with the policies and procedures they use when they determine how to vote in corporate proxy contests.
The commission actually approved two proposals, one pertaining to mutual funds and their proxy voting, the other pertaining to investment advisers, that would require them to adopt and implement proxy-voting procedures. However, both rules require mutual funds and investment advisers to provide current proxy voting records by request only – and not online, as some shareholder advocates had hoped.
However, the rules would require mutual funds to submit a record of their proxy voting semi-annually which would then be available on EDGAR, the SEC’s filings database.
Concern about insider information and potential conflicts of interest have heightened concern about the issue. Critics say inherent conflicts of interest between mutual funds and the firms they invest in make voting disclosure all the more important. However, the fund industry is largely opposed to the rule change.
Currently, there are twelve mutual funds that disclose their proxy votes, according to CBSMarketWatch, citing the Shareholder Action Network, a shareholder advocacy group.