In a speech, the U.S. Securities & Exchange Commission’s Director of the Division of Investment Management, Brian Daly, urged registered investment advisers to revisit their proxy voting policies and processes, arguing that proxy voting should be driven by client interests and investment mandates rather than a default “vote all proxies” approach. He also cautioned against treating proxy advisory firms’ recommendations as a de facto safe harbor, while noting his remarks did not necessarily reflect the views of the Commission or its staff. Daly pointed to Commission statements and guidance indicating advisers are not necessarily required to vote every proxy and may, with full disclosure and informed client consent, agree to limit or eliminate proxy voting authority, including where the cost of voting exceeds expected client benefit. He described how a “vote all proxies” norm has expanded the role of a small set of proxy advisory firms and raised questions about advisers’ fiduciary process when voting outcomes closely track proxy advisors’ standard policies, including potential Section 13(d) group concerns with habitual adherence. The speech also highlighted a presidential executive order on proxy advisors that directs the SEC Chair to consider, among other issues, whether proxy advisors should register as investment advisers, enhanced transparency around methodologies and conflicts of interest (including on DEI and ESG factors), and whether advisers’ use of proxy advice on non-pecuniary factors aligns with fiduciary duties, alongside encouragement for investor-directed voting programs and potential use of artificial intelligence tools subject to oversight and auditability. The remarks did not announce rulemaking or a formal timeline, but indicated the executive order topics are under consideration and invited industry engagement on potential Division or Commission action.
U.S. Securities & Exchange Commission 2026-01-08
SEC Investment Management Director calls for advisers to reassess proxy voting and default reliance on proxy advisors
In a speech, the U.S. SEC’s Director of Investment Management, Brian Daly, urged investment advisers to reassess proxy voting policies to prioritize client interests over a default “vote all proxies” approach and cautioned against over-reliance on proxy advisory firms. He highlighted ongoing considerations from a presidential executive order regarding proxy advisor registration, transparency, and the alignment of proxy advice with fiduciary duties, inviting industry engagement.