WASHINGTON, DC – Congressman Scott Fitzgerald (WI-05) introduced the Stopping Proxy Advisor Racketeering Act, which restores transparency and accountability in corporate governance and protects shareholders from biased advice. Specifically, it prohibits proxy advisory firms from issuing voting recommendations when any conflict could reasonably be expected to affect the objectivity or reliability of proxy advice, including being a member of a group that supports proposals similar to the shareholder-sponsored proposal. A violation of this prohibition would result in civil penalties.
“Proxy advisory firms have outsized influence over corporate governance but operate in the shadows,” said Congressman Scott Fitzgerald. “My bill will rein in these unaccountable firms and restore fairness and transparency for American investors.”
BACKGROUND: The U.S. proxy advisory market is dominated by a foreign-owned duopoly, which collectively and individually hold sufficient market power to shape the corporate governance of U.S. companies. Institutional Shareholder Services (ISS) and Glass Lewis have gained an unprecedented level of control–commanding 97% of the market. Despite their significant sway over trillions in shareholder assets, these firms operate with minimal transparency and are riddled with conflicts of interest.
Read the bill text here.
