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Hensarling Statement Regarding SEC Staff Proxy Advisory Letter Withdrawals

Washington, Sep 13 -

House Financial Services Committee Chairman Jeb Hensarling (R-TX) released the following statement on today’s action by the SEC’s Division of Investment Management to withdraw the 2004 letters issued by staff to Egan-Jones Proxy Services and Institutional Shareholder Services, Inc. This action comes ahead of the SEC’s Roundtable on the U.S. proxy process to enhance our capital markets and make them more attractive to companies to go public.

“The proxy advisory firm duopoly is in serious need of reform and SEC attention. The market power of proxy advisory firms demands greater accountability for these firms’ actions and the information that they provide institutional investors. Time and again, we’ve seen their recommendations riddled with errors, misstatements of fact, and incomplete analysis. By exploiting the market for proxy advice, proxy advisory firms have shown way too often that they are more focused on pushing special interest agendas rather than serving investors. It is imperative that we improve the proxy process to uphold transparency, accountability, and integrity that both shareholders and companies deserve and expect.

I also commend Chairman Clayton for affirming the fact that guidance is legally non-binding and for emphasizing the guidance distinction to Commission staff. The Committee routinely hears that regulation through enforcement and staff guidance hinders innovation and confidence in accessing our capital markets. All in all, today’s news out of the SEC is encouraging, and I look forward to continuing our work on the committee to protect shareholders.”