Proxy voting disclosure for mutual funds welcomed by SRI industry

By Doug Watt | January 24, 2003 | Last updated on January 24, 2003
2 min read

(January 24, 2003) Social investment advocates are praising the Securities and Exchange Commission in the U.S. for introducing new rules requiring American mutual funds to disclose their proxy voting policies. Canadian SRI supporters are calling on securities regulators here to introduce similar measures.

The rules, strongly opposed by the U.S. fund industry, were approved yesterday as part of a shareholder protection package put forward in the wake of Enron and other accounting scandals.

“These new rules are long overdue,” says Eugene Ellmen, executive director of Canada’s Social Investment Organization. “Investors have a right to know how mutual funds are voting the money that belongs to them.”

Gary Hawton, chief executive officer at Meritas Mutual Funds, says he applauds the SEC action. “It is time for fund companies to show their investors how they are voting,” he told

Ellmen says a proposed rule from the Canadian Securities Administrators requiring funds to briefly describe their voting activities is “woefully inadequate.”

“It would not require mutual funds to spell out their policies or provide detailed descriptions of their votes,” he added. “We believe the CSA should scrap their existing proposal on this issue, have a look at what the SEC has approved and introduce similar rules to give Canadian investors the same rights as U.S. investors.”

Hawton concurs. “I would hope that the CSA would take a good look at this ruling and adopt something similar in Canada rather than the watered-down version they are considering.”

“Proxy voting disclosure across the industry would help ensure Canadian investors that mutual funds are supporting corporate governance practices that are consistent with the best interests of investors, rather than company managers,” adds Robert Walker, vice-president of research at Ethical Funds. Both Ethical and Meritas disclose their proxy voting policies.

SEC chair Harvey Pitt says the commission received about 8,000 comments, mostly positive, on the proposal.

Related News Story

  • Tougher securities and auditing rules not enough: Social Investment Organization
  • The Investment Company Institute, the national association for the U.S. investment industry, says it’s generally supportive of the new rules with one exception: the disclosure of individual proxy votes.

    “Making mutual funds the only investment entities required to report all of their individual proxy votes will undoubtedly embolden outside special interests,” the ICI said in a statement. “This part of the rule denies mutual funds the right to confidential voting that until today was seen as essential to independent voting, and which will continue to be enjoyed by all other institutional investors.”

    Should mutual funds be forced to disclose their proxy voting policies? Share your opinions in the “Mutual Funds and Other Products” forum of the Talvest Town Hall on

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    Doug Watt