ICI Urges SEC to Act on Proxy Reform
"[R]eforms of the proxy process [should] promote efficiency, well-informed proxy voting decisions, and greater transparency and preserve the ability of advisers to serve their clients ... in proxy voting."
ICI Letter to SEC Chair Paul Atkins
"[R]eforms of the proxy process [should] promote efficiency, well-informed proxy voting decisions, and greater transparency and preserve the ability of advisers to serve their clients ... in proxy voting."
ICI Letter to SEC Chair Paul Atkins
The Investment Company Institute ("ICI") urged the SEC to provide clarity on its proxy reform plans ahead of the 2026 proxy season and to provide a durable framework that enhances efficiency, transparency, and informed voting while safeguarding advisers’ fiduciary duties.
In a letter to SEC Chair Paul Atkins, the ICI pointed to inconsistent SEC rulemakings, conflicting court rulings, and new state-level laws as creating instability that burdens funds, advisers, and investors. The ICI warned that inefficiencies—such as excessive quorum costs in fund proxy campaigns and activist-driven disruptions in closed-end funds—undermine both market efficiency and shareholder value.
To strengthen the proxy system, the ICI recommended that the SEC:
- Recognize the Unique Role of Funds and Advisers. The ICI urged that any regulatory action reflect the scale and fiduciary responsibilities of funds and their advisers, who often rely on proxy advisory firms for research but must ultimately act in clients’ best interests.
- Build on 2019 SEC Guidance. The ICI asked the SEC to reaffirm prior Commission guidance that proxy voting is a fiduciary duty of care and loyalty. The ICI emphasized that, while advisers may use third parties for support, they must retain responsibility for voting decisions.
- Modernize the Fund Proxy Process. The ICI highlighted that proxy campaigns have cost funds nearly $373 million in recent years, often just to achieve quorum. The ICI proposed reforms such as lowering quorum thresholds paired with higher approval requirements, easing shareholder communications, and removing certain shareholder vote mandates when adequate safeguards exist.
- Support Closed-End Funds. The ICI endorsed pending NYSE and Cboe rule changes that would make annual meetings optional for listed closed-end funds. The ICI argued this step would reduce predatory activist pressure, "reopen the closed-end fund IPO market," and advance federal policy goals to broaden investor access to private markets.