Stopping Proxy Advisor Racketeering Act

This bill would set strict conflict-of-interest rules for companies that sell voting advice to shareholders, often called proxy advisors. It would make it illegal for them to give advice if they have certain conflicts, like also selling consulting to the company being voted on, changing recommendations to win or keep a client, working with someone pushing the same proposal they’re advising on, or being a member of a group that backs that proposal. The bill’s short title is the Stopping Proxy Advisor Racketeering Act.

The Securities and Exchange Commission (SEC) could fine firms that break these rules after giving them notice and a chance to be heard. Penalties could also apply to others who helped cause a violation. A “proxy advisory firm” is defined as a business that sells advice on how shareholders should vote on specific matters at company meetings.

Key points

• Who is affected: Proxy advisory firms, public companies, and investors who rely on voting recommendations.
• What changes: Firms cannot give advice when they have certain conflicts, including selling consulting to the company, tweaking recommendations based on who pays, working with proponents of the same proposal, or belonging to a group that supports it. The SEC can issue fines for violations.
• When: The text does not state a start date for these rules.