Growing concerns regarding the increasingly prominent role of proxy advisory firms, including Institutional Shareholder Services and Glass Lewis, were largely not addressed when, on June 30, 2014, the Securities and Exchange Commission's (the "SEC") Division of Investment Management and Division of Corporation Finance issued joint guidance—Staff Legal Bulletin No. 20, "Proxy Voting: Proxy Voting Responsibilities of Investment Advisers and Availability of Exemptions from the Proxy Rules for Proxy Advisory Firms" ("SLB No. 20"). While SLB No. 20 provides important clarifications with respect to the requirements applicable to investment managers in connection with representing their clients’ interests in corporate voting matters and to proxy advisers, including in connection with disclosure of conflicts of interest, it may disappoint some companies that expected the SEC to take a stronger position in response to the growing concerns over the increasing influence of the proxy advisory firms in the corporate voting process.
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