SEC Forces Funds to Disclose Proxy Votes

The Securities and Exchange Commission voted today to increase transparency among mutual fund proxy voting.

The proposal, first floated in September, included some surprisingly stringent requirements that were left unchanged in the final rules. (For more details, see SEC Proposes to Force Funds to Disclose Proxy Votes.)

Under the new rules, funds will be required to share the decision-making process with investors. Specifically, funds will have to lay out the procedures it will use when a vote presents a conflict between the interests of fund shareholders and those of the fund's investment adviser or principal underwriter -- for instance, a CEO compensation issue regarding the chief executive of the fund's underwriter.

In addition, funds will have to make available their proxy voting records. Those records must identify the matter voted on, whether the matter was proposed by the issuer or by a security holder, whether and how the fund cast its vote, and whether the fund cast its vote for or against management. ...