A dispute over the role of back-office shareholder services company Broadridge Financial Solutions has erupted ahead of J.P. Morgan’s potentially bruising annual general meeting tomorrow.
The latest development is that the investment bank has agreed to have early tabulations on the state of voting re-started.
The affair has seen the influential Council of Institutional Investors, the not-for-profit body which represents investors with more than $3trn in assets, demand action from the Securities and Exchange Commission (SEC).
The row comes as J.P. Morgan’s chairman and chief executive Jamie Dimon faces a tough shareholder vote on his combined role in a motion put forward by the AFSCME Employees Pension Plan, the Connecticut Retirement Plans and Trust Funds, Hermes Equity Ownership Services and the New York City Pension Funds.
A similar motion garnered 40% of the shareholder vote at J.P. Morgan’s AGM in 2012. At last count, backers of this year’s measure were in striking distance of a majority.
Then last week, Broadridge abruptly discontinued its practice of tabulating advance votes on shareholder proposals at listed US firms, including the one affecting Dimon. Broadridge said it was asked to do so by Sifma, a lobby for US brokerage firms including J.P. Morgan.
In the bank’s case, the move was significant, as it may have swayed some investors that were still sitting on the fence over Dimon’s chairmanship.In response, the CII demanded that the SEC intervene to have Broadridge re-start the tabulations.
“Broadridge’s decision raises deeply troubling questions about the fairness and impartiality of the proxy system,” said the CII in a letter to the SEC.
“Not only was it made in the middle of the proxy season without any opportunity for investor or public input, it came only a few days before the conclusion of a highly publicised and contentious exempt solicitation at a company whose affiliates are Sifma members,” added the CII, referring to the upcoming vote on Dimon.
But the New York Times reported on Sunday that the bank would direct Broadridge to re-start the tabulations, after contact from New York State Attorney Eric Schneiderman.
Broadridge had no further comment for Responsible Investor.
Asked whether Broadridge was just doing the bidding of its client – J.P. Morgan – CII spokeswoman Amy Borrus said that while that was apparently the case, the bank was not its only client.
“As far as we understand it, Broadridge was also distributing information about the various proposals for the AGM on behalf of the shareholders who made them.”
She added: “It seems though that J.P. Morgan’s wishes were put above those of the other clients, which simply isn’t fair.”