Jan. 23, 2020
Vincent Szilagyi [redacted] January 23, 2020 Vanessa Countryman Securities and Exchange Commission 100 F Street, NE Washington, D.C. 20549 Re: File Number S7-22-19 Dear Secretary Countryman, I am deeply appreciative of the Securities and Exchange Commission’s (SEC’s) efforts to establish new rules to oversee proxy advisory firms and ensure greater accountability and oversight for the recommendations and advice they provide pension and investment fund managers. I was shocked to learn exactly how far from their fiduciary duty proxy advisors have strayed, to the point where they are now more likely to provide investment recommendations that reflect their own personal stances on a number of environment, social, and political policies, rather than recommendations that will actually grow and strengthen investments and pensions. While I agree that anyone should be able to steer their personal investments to causes they support, it should not be the job of proxy advisors to make such decisions using other peoples’ money. That is not the role they should be playing, nor is it how most Americans with investments or pensions think investing should work. The most important basis they should rely on is what will maximize their client’s returns. Yet, with only two companies—Glass Lewis and Institutional Shareholder Services—representing over 90 percent of the proxy advisory market, these two firms are essentially able to act with impunity. That includes failing to disclose potential conflicts of interest that could prevent them from providing sound financial advice and pushing recommendations that diminish, not grow returns for their client’s investors and pensioners. One such practice that is problematic is known as automatic voting, or “robo-voting.” This practice occurs when pension fund managers simply vote in lockstep with the recommendations provided, without review and consideration of whether such action upholds their fiduciary duty. In other words, funds are ceding the entire decision-making process on proxies without heed to whether the recommendations promote fund growth or not. ESG investing has been proven to diminish returns by nearly 44 percent, but the practice is still being pushed by proxy advisory firms. As someone who has just started their own consulting business, I am concerned about the stability and strength of my pension. As I continue to grow my business, I also want to be able to offer strong, stable 401K plans to attract and retain top talent. All of these goals are threatened by the practices in which proxy advisory firms engage. I have also seen firsthand the turmoil surrounding Colorado Public Employees' Retirement Association (PERA). PERA management continues to make unwise financial decisions that undermine and threaten the pensions of hardworking Coloradans. The more political pressure PERA faces, the worse this situation will get—which is just another reason proxy advisors need to be reined in before they are allowed to inflict more damage. Please accept this comment letter in support of rule changes recommended by the SEC and help protect the pensions and investments of tens of millions of Americans like me. Sincerely, Vincent Szilagyi