Mutual Fund Disclosure Good News for Shareholder Advocates(A)

In a move that should dramatically strengthen the power of shareholder advocacy, the Securities and Exchange Commission voted January 23 to require mutual funds and investment advisers to disclose their proxy voting policies and voting records. Trillium Asset Management Corporation submitted comments to the SEC in favor of the proposed rule, and the socially responsible investment community was particularly active in mobilizing support for the new requirements.
At issue is how mutual funds, which own nearly 20 percent of U.S. equities on behalf of 95 million Americas, cast their proxy ballots on a host of issues including board independence, executive compensation, and a range of social and environmental concerns raised each year by socially responsible investors, including Trillium Asset Management. Mutual funds seeking lucrative business managing employee pension plans for large companies have a potential conflict of interest when voting against company management on these issues. Making the conflict worse, the corporations know how mutual fund managers are voting, while those funds’ individual investors often do not.
“Mutual fund shareholders have the right to know how their property is being used. To me that is a fundamental right,” SEC Chairman Harvey Pitt said in favor of the new disclosure requirements. Trillium president Joan Bavaria told USA Today, that the increased disclosure is “going to go a long ways toward building trust among the investment community, which is sorely needed at this time.”
The new rule, which goes into effect in July, requires fund companies to publish their voting record in semiannual and annual reports available on their websites and to mail for free their voting records to fund shareholders who ask. Many shareholder rights advocates expect the new levels of disclosure to boost mutual funds’ support for their shareholder proposals. In addition, the information can empower individual investors with additional information to consider when selecting mutual fund companies. Trillium Asset Management Corporation has published both our proxy voting policies and results for many years. You can find our current proxy voting guidelines and our proxy voting record online.