Protecting American Investors From Foreign-Owned and Politically-Motivated Proxy Advisors
1. Purpose
Executive Order 14366 aims to safeguard American investors by addressing the influence of foreign-owned and politically-driven proxy advisors in corporate governance and shareholder voting.
2. Key Actions And Directives
- Review Proxy Advisor Rules: The SEC Chairman is instructed to evaluate and adjust existing regulations regarding proxy advisors, ensuring adherence to anti-fraud provisions and transparency.
- FTC Antitrust Investigations: The FTC Chairman will assess State antitrust investigations on proxy advisors and explore potential unfair competition or deceptive practices.
- Revise Fiduciary Responsibilities: The Secretary of Labor will update regulations concerning fiduciary duties of those managing shares within pension plans to prioritize financial interests of participants.
3. Important Points
- Role of Proxy Advisors: Proxy advisors like ISS and Glass Lewis significantly influence corporate governance, impacting shareholder proposals and board structures.
- Concerns of Political Agendas: There are apprehensions about proxy advisors promoting politically motivated agendas that may conflict with shareholder interests.
- Fiduciary Duty Importance: Proxy advisors are expected to uphold their fiduciary duties, acting in the sole financial interests of their clients.
- Regulatory Scope: The Executive Order clarifies it does not generate rights enforceable against the U.S., emphasizing its directive nature without creating legal liabilities.
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