ICI Statement on Executive Order on Proxy Advisory Firms

Washington, DC; December 11, 2025—The Investment Company Institute (ICI) issued the following statement in response to President Trump’s executive order on proxy advisors.

“We look forward to working with the administration on reforms that strengthen the proxy voting system to better serve retail investors and support the health of US capital markets. A fair and efficient proxy process empowers millions of Americans to shape the long-term success of their investments and the broader economy. ICI largely supported the process that led to the 2020 SEC regulation of proxy advisory firms put forward by SEC Chairman Jay Clayton. It aligned proxy advice with the fiduciary duty of asset managers. The rescission of the 2020 SEC rules and subsequent litigation have now created uncertainty in the proxy process. Funds and their investors deserve clear, thoughtful standards in this important area.”

Background:

• Asset managers that provide mutual funds and exchange-traded funds (ETFs) collectively own a significant portion of publicly traded equities on behalf of nearly 130 million American investors.
• Asset managers have fiduciary duties to funds and other clients under the Investment Advisers Act of 1940, ERISA, and other laws. Federal regulatory agencies have stated that those fiduciary duties apply to tasks undertaken by investment advisers, including voting proxies for clients’ investments.
• Funds own stocks and have an obligation to ‘vote their shares’ on corporate matters, which is normally delegated to their investment advisers.
• Advisers vote proxies in line with clients’ investment objectives and in their best interest, including return, as a part of their fiduciary duty.
  • The goal is to enhance long-term shareholder value, unless a client has given specific other direction.
• Most proposals are recurring and uncontroversial matters such as uncontested election of directors and auditor ratifications.
  • Some are more complex, e.g., executive compensation, contested director elections, or shareholder proposals that are introduced by political or special interest activists.
• In all instances, fund boards adopt proxy voting policies which the adviser follows. In executing votes, the final decision always rests with the fund or the adviser.
• Funds must publicly disclose how they voted on each proposal.
  • A large majority of management proposals pass with strong support from funds.
  • A relatively small percentage of shareholder proposals pass with mixed support from funds.
• Some funds use proxy advisory firms to provide research, which funds may use with other data points they collect, administrative support, and vote recommendations.
• To increase the voice of individual investors, some index funds are now piloting programs offering individual shareholders ‘directed voting.’ These programs are designed to provide fund shareholders with more influence in how a fund votes its proxies. Other fund complexes are not offering, and are not contemplating offering, directed voting programs.
• For funds, this highly regulated process is always focused on serving clients’ best interests.
• The rescission of the 2020 SEC rules to regulate proxy advisory firms and the subsequent litigation, has created uncertainty in the proxy process. Accordingly, earlier this year, ICI wrote to SEC Chairman Paul Atkins seeking guidance for the upcoming proxy season and offering ICI’s partnership in crafting new regulations.
• ICI is happy to work with the Trump Administration, SEC, and Congress so its members can fulfill their legal duties, maximize returns for investors, and increase the voice of individuals in the proxy process.