December 27, 2019
12/27/19
Secretary Vanessa Countryman
Securities and Exchange Commission
100 F Street NE
Washington, DC 20549-1090
Re: File Number S7-22-19
Dear Sec. Countryman:
Thank you for allowing the public to comment on the SECs proposed new rules on proxy advising. I am a small-business owner in Florida and Im concerned about the economy and fiscal responsibility. I appreciate that you are taking up this issue.
Florida has the nations eighth-largest pension shortfall at more than $40 billion. Right now, we can only cover less than eight cents on every dollar owed to pensioners. This is a disaster waiting to happen, and it will affect some of our most dedicated public servants. That is unacceptable.
The problem has been complicated in recent years by the current proxy advisory process. Firms in this sector are more inclined to make recommendations based on environmental, social, and governance (ESG) policies instead of what would deliver the highest financial return on their clients investments. Examples have been recommendations that negatively affect firearm manufacturers, tobacco, private prison, and energy companies even though these industries yield the best returns. I am not necessarily a fan of some of these industries, but they are legitimate, legal operations that pay taxes, create jobs, and provide positive investment returns.
Where does it end? Right now, it is limited to ESG causes, but these firms could soon target businesses for whatever capricious reasons they choose because there is no accountable. Perhaps they would divest from companies that do business with China. Or maybe if a CEO says something they dont deem woke enough. And what if new competitors emerge that support conservative politics? The best rule is to not go down this path as it is not appropriate for investing. Take those views to the voting booth.
The only consideration should be respecting pensioners hard-earned financial security. Data on ESG-investing has been found to generate 43.9 percent less than standard SP 500 index funds. Current retirement nest eggs could also be 10 percent lower if proxy advisory firms are not checked soon. I encourage you to take whatever steps necessary to prevent that.
Cordially,
Larry Zeiler