SEC Commissioner Calls for Closer Look at Voting by Index Giants

(Bloomberg) -- Passive mutual funds often leave investors in the dark on corporate-governance issues, threatening their ability to gain information on proxy voting decisions, a top U.S. regulatory official said.

“Investors do not get nearly enough usable information about how their money is being voted, and because of that, they cannot adequately hold those fund managers accountable for how they vote in those elections,” Securities and Exchange Commissioner Robert Jackson Jr. said Thursday in a speech in New York. “It's time for that to change.”

Jackson said the SEC should “more closely examine whether funds should have to disclose information about proxy voting in a different manner” to allow informed decisions by retail investors. The commissioner was speaking at a Federal Trade Commission conference on competition and consumer protection at New York University.

The rise of investing in index and exchange-traded funds over the past decade has meant that firms such as BlackRock Inc., State Street Corp. and Vanguard, who are among the biggest providers, have become top holders of some of the world's largest companies -- across a range of industries from Facebook Inc. in technology to lenders like JPMorgan Chase & Co.

Barbara Novick, vice chairman of BlackRock, weighed in on the firm's influence in a panel later Thursday morning. She said that BlackRock's stewardship team meets regularly with companies and publishes its priorities publicly.

“We're incredibly transparent,” she said.

To contact the reporter on this story: Annie Massa in New York at amassa12@bloomberg.net

To contact the editors responsible for this story: Margaret Collins at mcollins45@bloomberg.net, Steven Crabill, Peter Eichenbaum

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