Duffy Introduces Bipartisan Bill To Protect Investors, Improve Corporate Governance

May 24, 2016Press Release

Tuesday, May 24, 2016


WASHINGTON, D.C. – Today, Congressman Sean Duffy (WI-07) and Congressman John Carney (DE-AL), introduced H.R. 5311, the Corporate Governance Reform and Transparency Act, which will protect investors and improve corporate governance of publicly-held companies by requiring proxy advisory firms to:

  • register with the Securities and Exchanges Commission (SEC),
  • disclose potential conflicts of interest,
  • make publicly available their methodologies for formulating proxy recommendations and analyses.  

Federal securities law requires public companies to issue proxy statements to their shareholders before voting on significant corporate actions, such as electing company directors and approving executive compensation packages. To assist them in their voting decisions, many institutional investors hire proxy advisory firms to provide analysis, recommendations and even execute votes on proxy matters. The role of proxy advisory firms in the U.S. economy and in shaping corporate governance is of national significance, however they are not without conflicts of interest.

“Proxy advisory firms play an important role in advising their clients, including pension plans, mutual funds, and other institutional investors but they are susceptible to activist influence and potential conflicts of interest,” said Congressman Duffy. “Wisconsin investors expect that their rights as shareholders won’t be compromised by professional institutional investors who rely on conflicted advisors to issue recommendations and execute votes. My bill will foster greater accountability, transparency, responsiveness, and competition in the proxy advisory firm industry.”

“This legislation will give the SEC the additional tools it needs to provide better oversight of proxy advisors,” said Congressman Carney. “I’m glad to be working with Mr. Duffy to ensure investors have access to reliable information and recommendations. Proxy advisors have an important role to play and this transparency will benefit investors and improve the corporate governance system.”

Committee Hearing Background:

Congressman Duffy is a member of the House Financial Services Committee’s Subcommittee on Capital Markets and Government Sponsored Enterprises, which held a hearing titled “Examining the Market Power and Impact of Proxy Advisory Firms” in June 2013.

Witnesses at that hearing expressed support for increased oversight of proxy advisory firms and for the framework of H.R. 5311. The Subcommittee is expected to hold a hearing on Congressman Duffy’s bill later this month.

Coalition In Support of H.R 5311

  • U.S. Chamber of Commerce
  • Biotechnology Industry Organization (BIO)


For the full text of the bill, click HERE