Manifest has written to the SEC in support of rule changes designed to eliminate uninstructed broker votes being used at director elections. The New York Stock Exchange had recently filed a request with the SEC to change Rule 452 which allows brokers to use client votes if no instructions have been received. The proposal has been stuck with the SEC since October 2006 and investor groups such as the Council of Institutional Investors have been pushing reform for over a decade.

Comment letters have been arriving at the SEC from all sides of the debate with some corporations claiming that the rule change would “suppress the voice of individual investors”. Others have been concerned that the time-table set for the report will give opponents time to mount a counter-reform campaign.

Manifest set out the view that, while the reform was both long overdue but extremely welcome, there are many aspects of the US proxy system which are in need of radical overhaul. The broker vote problem was just one symptom of wider systemic failures which prevents issuers and investors from properly communicating with one another and create immense inefficiencies such as, for example, record dates more pertinent to an age of the Pony Express rather than a web-enabled financial services industry which looks to STP as a matter of course.

Last Updated: 6 April 2009