Bill Overview
Title: Putting Investors First Act of 2022
Description: This bill requires a proxy advisory firm to register with the Securities and Exchange Commission and prohibits an unregistered proxy advisory firm from using interstate commerce to provide proxy-voting advice, research, analysis, or recommendations to any client. With respect to these firms, the bill (1) establishes procedures for both registration and termination of registration; (2) requires each firm to employ an ombudsman, designate a compliance officer, and publicly disclose conflicts of interest; (3) allows issuers to assess and comment on proxy voting recommendations; and (4) prohibits unfair, coercive, or abusive practices. The bill establishes a private right of action against a proxy advisory firm that endorses an approved proposal that is not supported by the issuer and is found to be illegal.
Sponsors: Rep. Steil, Bryan [R-WI-1]
Target Audience
Population: Individuals connected to proxy advisory firms and their clients
Estimated Size: 300000
- The legislation directly targets proxy advisory firms, which are businesses providing services in financial markets, specifically related to proxy voting activities.
- Investors are indirectly targeted as recipients of proxy advisory services, as changes in registration and operation of these firms may impact the advice and research provided to them.
- Publicly traded companies and their management teams can be affected due to changes in how proxy advisory firms operate and provide recommendations that influence shareholder voting.
- The bill primarily focuses on the financial sector, especially the market participants dealing with corporate governance and representation of shareholder interests in public companies.
Reasoning
- The policy targets a relatively small segment of the population directly involved or impacted by proxy advisory firms, estimated at about 300,000 Americans.
- These individuals include employees of the proxy advisory firms, their clients, such as institutional investors, and potentially affected public companies.
- Their wellbeing might see changes due to increased transparency and regulatory compliance, affecting job security or workload, which may reflect in their self-reported wellbeing scores.
- Given a budget constraint to implement this policy, the primary impact might be administrative on the firms themselves, with indirect effects on their clients through potentially improved quality and transparency of advice.
- Most people outside this demographic would have a negligible direct impact due to the policy's specificity in scope and limited budget relative to the total US population.
Simulated Interviews
Financial Analyst (New York, NY)
Age: 52 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 10/20
Statement of Opinion:
- The increased registration requirements might improve the transparency and reliability of advice we receive.
- I am hopeful but cautious about how these changes might affect the costs of services we use.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 7 | 5 |
CEO of a public company (Chicago, IL)
Age: 65 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 5/20
Statement of Opinion:
- The policy could enhance our ability to engage constructively with proxy advisory firms.
- I'm concerned about potential increased costs and administrative burdens.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 8 | 5 |
| Year 10 | 8 | 5 |
| Year 20 | 7 | 5 |
Startup Employee (Los Angeles, CA)
Age: 30 | Gender: female
Wellbeing Before Policy: 8
Duration of Impact: 0.0 years
Commonness: 20/20
Statement of Opinion:
- I don't see how this will impact me, as I'm not dealing directly with these advisory services.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 8 |
Compliance Officer at a Proxy Advisory Firm (Boston, MA)
Age: 45 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 3.0 years
Commonness: 8/20
Statement of Opinion:
- This increases our workload and responsibility, but it's essential for maintaining trust and integrity in the financial markets.
- I expect the initial period to be stressful due to new compliance measures.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 4 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 6 | 5 |
| Year 10 | 5 | 5 |
| Year 20 | 4 | 5 |
Institutional Investor (San Francisco, CA)
Age: 37 | Gender: other
Wellbeing Before Policy: 6
Duration of Impact: 6.0 years
Commonness: 7/20
Statement of Opinion:
- We might see improvements in the clarity of recommendations, which could impact our investment decisions positively.
- Administrative costs might increase, impacting overall fund allocation.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 6 | 5 |
| Year 20 | 6 | 5 |
Software Developer (Austin, TX)
Age: 29 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 0.0 years
Commonness: 20/20
Statement of Opinion:
- I don't interact with proxy advisory services, so I don't see any personal impact.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 7 |
| Year 10 | 7 | 7 |
| Year 20 | 7 | 7 |
Legal Consultant for Financial Firms (Houston, TX)
Age: 39 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 6/20
Statement of Opinion:
- This may indirectly increase demand for our services as firms navigate new compliance requirements.
- The clarity and reduction of conflicts of interest could benefit clients and the market as a whole.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 5 |
| Year 10 | 7 | 5 |
| Year 20 | 6 | 4 |
Retired, Former Corporate Board Member (Miami, FL)
Age: 60 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 3.0 years
Commonness: 9/20
Statement of Opinion:
- I hope this solidifies the integrity of advisory services which I depended on during my career.
- Could have faced these challenges if still serving on a board.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 5 | 5 |
| Year 3 | 5 | 5 |
| Year 5 | 5 | 5 |
| Year 10 | 5 | 5 |
| Year 20 | 5 | 5 |
Accountant for a Proxy Advisory Firm (Seattle, WA)
Age: 48 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 4.0 years
Commonness: 10/20
Statement of Opinion:
- These changes will involve more detailed work but might not significantly alter daily tasks, aside from initial adjustments.
- The firm's reputation might improve given these regulatory changes.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 6 | 5 |
| Year 20 | 6 | 4 |
University Professor in Economics (Philadelphia, PA)
Age: 58 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 2.0 years
Commonness: 15/20
Statement of Opinion:
- This policy provides a real-world application of the principles I teach and research about.
- Its long-term effects on market dynamics make it a unique case study.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 5 | 5 |
| Year 3 | 5 | 5 |
| Year 5 | 5 | 5 |
| Year 10 | 5 | 5 |
| Year 20 | 5 | 5 |
Cost Estimates
Year 1: $20000000 (Low: $15000000, High: $25000000)
Year 2: $19000000 (Low: $14000000, High: $24000000)
Year 3: $18000000 (Low: $13000000, High: $23000000)
Year 5: $17000000 (Low: $12000000, High: $22000000)
Year 10: $16000000 (Low: $11000000, High: $21000000)
Year 100: $10000000 (Low: $5000000, High: $15000000)
Key Considerations
- The bill imposes new regulatory requirements on an industry segment, potentially increasing costs for firms which could partially be passed on to clients or investors.
- The SEC will require additional resources to oversee the new registration and compliance requirements for proxy advisory firms.
- The impact on investors and companies is largely indirect, with potential variations in the recommendations they receive and the voting processes involved.
- The introduction of private rights of action introduces potential legal costs and complexities.
- Long-term benefits might include improved investor confidence and market stability.