Protecting Retirement Savings From Politics Act

Summary#

This bill makes many changes to federal securities rules. It would require the Securities and Exchange Commission (SEC) to limit issuer disclosure rules to information that is material for investor voting or investing decisions. It creates a Public Company Advisory Committee inside the SEC to advise on reporting, governance, proxy processes, trading, and capital formation. The SEC must study certain European corporate sustainability directives and conduct regular studies of proxy advisory firms and the proxy process. The bill would require proxy advisory firms to register with the SEC, follow conflict-of-interest and accuracy procedures, provide annual reports, appoint an ombudsman, and face possible sanctions or private liability in some cases. It adds reporting duties for large institutional investment managers about how they use proxy advisory recommendations and requires economic analysis for certain votes. The bill would ban automatic "robovoting" that simply follows a proxy advisor recommendation without independent review, restrict outsourcing of voting decisions, set rules for how passively managed funds vote, and require advisers to place pecuniary (monetary) factors first when giving personalized investment advice unless a customer agrees otherwise.

What it means for you#

• If you are an investor: Companies and advisers would be required to focus disclosures and voting on information the SEC finds material to investment or voting decisions. Institutional managers would report how they vote and how often they follow proxy advisors. Robovoting could be banned, which may change how some votes are cast.
• If you hold a passively managed fund: Investment advisers would generally need to follow the voting instructions of the beneficial owner, follow an issuer's board recommendation, abstain, or use mirror-voting rules described by the SEC.
• If you run or advise a public company: Proxy advisory firms would have new registration, transparency, and accuracy rules. You would get earlier access to data used by proxy advisors and an opportunity to correct it before recommendations are published.
• If you work at a proxy advisory firm: You would need to register, disclose conflicts, maintain staff and processes to ensure accurate recommendations, provide annual reports, appoint an ombudsman, and follow SEC rules on prohibited practices.
• If you are an investment adviser or broker: When giving personalized advice, you must prioritize pecuniary factors (financial impact) unless the customer gives informed consent to consider non-pecuniary factors.

Expenses#

No publicly available information.

Proponents' View#

The bill's text expresses aims to protect investors and retirement savings by limiting disclosures to material information, improving oversight of proxy advisory firms, preventing automatic voting without review, and pushing advisers to favor financial (pecuniary) interests for clients. It also calls for studies of certain EU sustainability directives and the proxy process to inform future policymaking.

Opponents' View#

No publicly available information.