Congressman Scott Fitzgerald from Wisconsin has introduced a new bill aimed at increasing transparency and accountability in corporate governance. The proposed legislation, named the Stopping Proxy Advisor Racketeering Act, seeks to protect shareholders from potentially biased advice by prohibiting proxy advisory firms from issuing voting recommendations when conflicts of interest might affect their objectivity or reliability.
Fitzgerald stated, “Proxy advisory firms have outsized influence over corporate governance but operate in the shadows. My bill will rein in these unaccountable firms and restore fairness and transparency for American investors.”
The U.S. proxy advisory market is currently dominated by two foreign-owned companies, Institutional Shareholder Services (ISS) and Glass Lewis, which together control 97% of the market. These firms have significant influence over shareholder assets yet operate with minimal transparency and are often criticized for having conflicts of interest.
The proposed legislation aims to address these issues by imposing civil penalties on firms that violate its provisions.
