The U.S. Securities and Exchange Commission (SEC) took an initial step Wednesday to lay out the legal limitations of a powerful industry that’s known for questioning companies’ decisions on executive pay and business strategy.
SEC commissioners voted 3-2 at a meeting in Washington to issue guidelines for fund managers’ responsibilities in dealing with so-called proxy-advisory firms and clarifying that those firms’ interactions with shareholders are generally covered by the SEC’s rules.
The new guidance is expected to be the first of a series of moves the agency will take under Chairman Jay Clayton to rein in firms such as Institutional Shareholder Services Inc. (ISS) and Glass Lewis & Co., which are hired by mutual funds and other shareholders to give advice on voting in corporate elections.
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