Since the SEC announcement on 23 January of the requirement for mutual funds to make publicly available proxy voting policies as well as the actual votes, many are still unprepared to meet the compliance deadline of 6 August, according to the Investor Responsibility Resource Center (IRRC).
Bradley Webb, VP at IRRC, claims that “many firms will only have what appears to be a solution in place by the SEC deadline.” This is due in part to the alleged reluctance of fund managers to comply with the SEC ruling that will make it mandatory that proxy votes be made with the best interests of the shareholders in mind – as well as an evident lack of education of managers who have never had to meet the demands that reporting of proxy voting entails.
There are also strong concerns from the mutual fund community that the new obligation to voteproxies will get in the way of the incremental revenues gained from lending their securities.
The IRRC is offering a “Compliance Solution” product for firms falling behind the August deadline, the organisation says its “Proxy Voting Agency Service” is designed specifically for those companies looking to outsource the work of becoming compliant by the SEC deadline.
Domini Social Investments, which has publicly disclosed its proxy votes since 1999, supports the idea that by increasing transparency of mutual fund proxy votes, America is taking a significant step in the right direction with regard to corporate governance.