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CtW Investment Group calls for SEC investigation of proxy services firm Broadridge

Union pension-linked group wants probe of “monopoly position”

The CtW Investment Group, the shareholder advocacy group allied with US labour pension funds with assets of around $250bn (€192bn), is calling for the Securities and Exchange Commission to investigate proxy voting services provider Broadridge Financial Solutions.

It stems from the controversy over Broadridge’s role ahead of investment bank J.P.Morgan’s high profile annual meeting last month when it abruptly discontinued its practice of tabulating advance votes on shareholder proposals.

The move prompted a response at the time from the influential Council of Institutional Investors, which wrote to SEC Chairman Mary Jo White saying the firm’s actions raised “deeply troubling questions” about the fairness and impartiality of the proxy system.

Now CtW has asked the SEC to undertake a “broader investigation” of the matter.

“We believe the Commission should undertake a broader investigation, including a public hearing where testimony can be received, into the relationships between Broadridge and its broker-dealer clients, including J.P.Morgan,” writes CtW Executive Director Dieter Waizenegger in a letter to SEC Secretary Elizabeth Murphy.He adds: “The monopoly position Broadridge plays in the proxy voting process requires heightened scrutiny by regulators.”

Broadridge, which provides investor communications and other solutions to banks, broker-dealers, mutual funds and corporations, began as the brokerage services division of business services firm Automatic Data Processing (ADP) in 1962. It became an independent, listed company in 2007.

“The monopoly position requires heightened scrutiny”

Waizenegger suggests the SEC should examine whether any firms have “undue influence” over Broadridge given its “expansive relationship” with New York Stock Exchange member organizations.
Broadridge declined to comment.
Founded in 2006, the CtW Investment Group works with pension funds sponsored by unions affiliated with Change to Win, a federation of unions representing nearly 5.5m members.