December 19, 2019
December 19, 2019 Ms. Vanessa Countryman Secretary Securities and Exchange Commission 100 F Street NE Washington, DC 20549-1090 Re: File Number S7-22-19 Dear Ms. Countryman: In 2018, I wrote a letter to the SC encouraging the Commission to ensure that proxy advisory firms serve the financial interests of retirees instead of political activism. I appreciate that the Commission is once again involving the public and are comporting yourselves with transparency, unlike the two main proxy firms in question. I am filing a new set of comments in light of your new proposed rule and recent guidance finding that “proxy voting advice provided proxy advisory firms generally constitutes a ‘solicitation’ under Federal proxy rules.” I commend you for this policy that subjects these firms to anti-fraud rules, as that is what many of their practices amount to in my opinion. This issue means a lot to me as I am a retired public employee. I am completely dependent on pensions and do not have other income outside of Social Security; I receive my pension through the Pennsylvania State Employees Retirement System (SERS) and my late husband’s pension through the Pennsylvania Public School Employees Retirement System (PSERS). SERS has the nation’s fourth-largest shortfall at more than $66 billion with just 55 percent of their liabilities funded. That is why, as I wrote last year, I would argue the SEC needs to exercise its regulatory authority to make sure firms like these are transparent and adhere to standards that are clear. With the growth of shareholder activism, the current patchwork of policies is no longer acceptable. Pensioners, retail investors, and the market would benefit should these proxy firms be without conflicts of interests and pension funds are protected from excessive political activism. In the meantime, I have studied the issue further and learned of more examples of proxy firms’ poor fiduciary practices. Two investing strategies, if they can be called that, are particularly troublesome taken together. The use of specialty reports elevates the agendas of specific investors over the proxy advisors’ fiduciary duties to pensioners, reinforcing certain voting patterns while maintaining the credibility of having sought an independent opinion. This is exacerbated by the use of “automatic voting,” which occurs when a pension fund manager automatically votes along the lines of proxy advisory firm recommendations, even if these recommendations go against the interests of pensioners. This dogmatic approach virtually guarantees substandard returns in addition to forcing pensioners to fund political positions they might not agree with. I want to reiterate that I share many of the views expressed by those who want to connect their investments to environmental or other social issues. That said, a public pension fund is not the proper entity to promote those issues, especially through specialty reports and automatic voting. Retirees like me worked our entire life, and we are owed a strong pension fund to deliver the retirement security that was promised to us when we started working. I am grateful for your continued work to strengthen regulations on proxy firms. Sincerely, Jacqueline P. Mikus [redacted]