A new SEC proposal regarding proxy advisors will make it harder for shareholders to vote against CEOs’ preferences. However, there is a 60-day period to comment and propose amendments to the new regulation. Please send your comments to the SEC and to ProMarket as well. We will publish the best of them on our website. 



The New York Stock Exchange. Photo by Wally Gobetz via Flickr [CC BY-NC-ND 2.0]


On November 5, the Securities and Exchange Commission proposed new rules on how proxy advisor can express their opinions and on how shareholders can make proposals.


These two proposals are subjected to a 60-day public comment period.


The SEC approved the new rules with a 3-2 vote. Commissioners Robert Jackson and Allison Herren Lee voted against their colleagues’ proposal. In Jackson’s view, the new regulation “simply shields CEOs from accountability to investors. Whatever problems plague corporate America today, too much accountability is not one of them.”




Investors who lack time and money to get direct information on the company they own shares in usually hire proxy advisors who make recommendations about how shareholders should vote. With the new rules, proxy advisors will have less room to maneuver, and voting against managements’ preferences will be much more difficult. Firms recommending a vote against executives must now give their analysis to firms’ managements and are exposed to a risk of federal litigation on methodology.


New limits on re-submissions of proposals previously blocked by a majority of shareholders will remove key CEO accountability measures from the ballot for years.


According to Reuters, the new regulation is “one of the biggest wins for the corporate lobby under President Donald Trump.”


Please send your comments to rule-comments@sec.gov and to our address as well,  ProMarket@chicagobooth.edu. The three best proposals we receive will be published on ProMarket.org.


As our name suggests, ProMarket is a blog committed to open markets, fair competition, accountability, and shareholder democracy. For this reason we think it is important to open debate on these new rules. The proxy advisor industry is a duopoly and as such needs to be regulated, as even the US Chamber of Commerce advocates. But is this the right set of rules?   


We at ProMarket hope the discussion will be lively and well-participated. To give substance to this debate, we will run a series of articles on the subject, as well as a forthcoming episode of Capitalisn’t, the podcast co-hosted by Kate Waldock and Luigi Zingales. Moreover, we invite ProMarket readers and contributors to benefit from the opportunity offered by the 60-day public comment period and send their opinions to the SEC. 


Please send your comments to rule-comments@sec.gov and to our address as well,  ProMarket@chicagobooth.edu. The three best proposals we receive will be published in this blog. 


As economists, we know the importance of incentives. Therefore, we are also offering these prizes: The best comment’s author will win a free ticket to the Stigler Center’s flagship event, the 2020 Antitrust Conference in Chicago. Click here to see the previous conference’s program, featuring prominent scholars, thinkers, and policymakers. The authors of the second and third best comments will get a Capitalisn’t t-shirt.   


However, the biggest prize will be to participate in a debate that scholars and individual investors cannot afford to leave to lobbyists and big financial corporations.



The ProMarket blog is dedicated to discussing how competition tends to be subverted by special interests. The posts represent the opinions of their writers, not necessarily those of the University of Chicago, the Booth School of Business, or its faculty. For more information, please visit ProMarket Blog Policy.