Congressional Testimony: Shareholder Proposals, Index Fund Voting and the Need for Proxy Advisor Reform

Authors

Lawrence A. Cunningham, George Washington University Law SchoolFollow

Document Type

Testimony

Publication Date

2023

Status

Working

Abstract

This Congressional testimony, requested by the House Financial Services Committee, reviews the history and current state of the federal shareholder proposal rule and how it has been seized by special interests to push agendas at odds with shareholder interests; ponders the conundrum that passive investment funds deign to actively vote shares without either knowledge or authority; and laments how proxy advisors, intended to support such passive funds, make matters worse through a lack of both accountability and incentives to promote accuracy rather than expediency. Congress should restore the legitimacy of the shareholder proposal process, revisit and/or eliminate voting by index funds, and regulate and/or eliminate the need for the proxy advisor industry.

GW Paper Series

2023-40

SSRN Link

https://ssrn.com/abstract=4514193

Recommended Citation

U.S. House, Committee on Financial Services, "Protecting Investor Interests: Examining Environmental and Social Policy in Financial Regulation," Vol. 169 Congressional Record No. 119 (July 12, 2023) (H.R. 4578-4600)