David A. Katz and Trevor Norwitz are partners at Wachtell, Lipton, Rosen & Katz. This post is based on a Wachtell Lipton publication by Mr. Katz and Mr. Norwitz.
In the latest effort to enhance transparency by proxy advisory firms, six members of the Senate Banking, Housing and Urban Affairs Committee sent letters to Institutional Shareholder Services (ISS) and Glass Lewis & Co., which they noted control 97% of the proxy advisory industry, requesting information regarding their eligibility for exemption from the proxy rules, accuracy of reporting and potential conflicts of interests.
The Senators’ letters reflect many of the concerns underlying the bill passed by the House of Representatives last December, titled the Corporate Governance Reform and Transparency Act of 2017, which would require proxy advisory firms to register with the U.S. Securities and Exchange Commission, disclose potential conflicts of interest and codes of ethics, and publicize their methodologies for formulating proxy recommendations.
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