To amend the Securities Exchange Act of 1934 to require certain disclosures by institutional investment managers in connection with proxy advisory firms, and for other purposes.
Key claim: HR3402 would require institutional investment managers using proxy advisory firms to annually disclose how they voted on shareholder proposals, the percentage of votes aligned with proxy firm recommendations, and certifications that votes served shareholders’ best economic interests.
Abstract
(HR3402 · 119th Congress)
This bill requires certain institutional investment managers that use proxy advisory firms to disclose information related to voting on shareholder proposals. (Proxy advisory firms provide voting services and advice to institutional investors in public companies for proposals presented at shareholder meetings.) Generally, institutional investment managers must report annually (1) how the manager voted on each shareholder proposal, (2) the percentage of votes cast in accordance with proxy advisory firm recommendations, and (3) explanations such as how votes are reconciled with fiduciary duties. Managers must also certify that votes were based solely on the best economic interest of the shareholders. In addition, large institutional investment managers must (1) inform customers that shareholders are not required to vote on every proposal; (2) on certain votes, determine through an economic analysis the vote that is in the best economic interest of shareholders; and (3) report any such analysis annually.
Latest action (2025-05-14): Referred to the House Committee on Financial Services.
Why this matters
Proxy advisory firms like ISS and Glass Lewis heavily influence how institutional investors vote on corporate governance matters, and critics argue managers defer to their recommendations without independent analysis of shareholder economic interest. HR3402 would introduce transparency into that reliance and add a fiduciary-style certification, potentially reshaping how asset managers vote on ESG-related and other shareholder proposals. The bill fits a broader legislative and regulatory push to constrain proxy advisor influence and reorient institutional voting toward economic-return criteria.