More On Legal & Compliancefrom The Advisor's Professional Library
- Suitability and Fiduciary Duty Recommending suitable investments is more than just a regulatory obligation. Many investors bring cases claiming lack of suitability, so RIAs must continuously put the onus on clients to notify the advisor of changes in their financial situation.
- Privacy Policies and Rules Whether an RIA is SEC or state-registered, the firm must have policies and procedures in effect to protect clients privacy. Policies and procedures should explicitly require an RIA to send out its privacy notice each year.
The Securities and Exchange Commission announced Wednesday the agenda and panelists for its roundtable on Dec. 5 to discuss the use of proxy advisory firm services by institutional investors and investment advisors.
The roundtable will be held at SEC headquarters in Washington and will be divided into two sessions.
In the first session, participants — who include former SEC Chairman Harvey Pitt; Karen Barr, general counsel for the Investment Adviser Association; and Jeffrey Brown, head of Legislative and Regulatory Affairs for Charles Schwab — will discuss, among other topics, the current use of proxy advisory services, including the factors that may have contributed to their use, the purposes and effects of using the services, and competition in the marketplace for such services.
The second session will include a discussion on issues identified in the commission’s 2010 concept release on the U.S. proxy voting system, including potential conflicts of interest that may exist for proxy advisory firms and users of their services, and the transparency and accuracy of recommendations by proxy advisory firms.
IAA’s Barr told ThinkAdvisor that proxy advisory firms provide a “wide range” of services to advisors, including mechanics of voting, research of the various issues that come up on shareholder ballots, as well as providing recommended ways to vote. The latter service, she said, “is generating a lot of discussion because some issuers say the providers lack transparency.”
Institutional Shareholder Services (ISS) and Glass Lewis & Co., Barr said, “together hold 97%” of the proxy advisory market.
Issues that Barr said she plans to focus on are to “counter some of the misperceptions that advisors rotely follow ISS,” and to discuss “the conflicts of interest by these proxy advisory firms and how advisors evaluate those conflicts.”
Other roundtable panelists include:
• Mark Chen - Associate Professor of Finance, Georgia State University
• Michelle Edkins - Managing Director and Global Head Corporate Governance and Responsible Investment, BlackRock, Inc.
• Yukako Kawata - Partner, Davis Polk & Wardwell LLP
• Hoil Kim - Vice President, Chief Administrative Officer and General Counsel, GT Advanced Technologies, Inc.
• Eric Komitee - General Counsel, Viking Global Investors LP
• Jeff Mahoney - General Counsel, Council of Institutional Investors
• Nell Minow - Co-Founder and Board Member, GMI Ratings
• Trevor Norwitz - Partner, Wachtell, Lipton, Rosen & Katz
• Katherine Rabin - CEO, Glass Lewis & Co. LLC
• Gary Retelny - President, Institutional Shareholder Services, Inc.
• Michael Ryan - Vice President, Business Roundtable, and former president and COO of Proxy Governance, Inc.
• Anne Sheehan - Director of Corporate Governance, CalSTRS
• Damon Silvers - Director of Policy and Special Counsel, AFL-CIO
• Darla Stuckey - Senior Vice President of Policy and Advocacy, Society of Corporate Secretaries
• Lynn Turner - Managing Director, LitiNomics, Inc.