Banning brokers from voting mutual fund shareholders' proxies for fund directors could potentially empower mutual fund investors, but could create a problem for some companies, The Wall Street Journal reports.
The New York Stock Exchange rule, decades old, permits brokers to vote proxies for mutual fund shareholders who do not cast a vote. The proposed change would apply only to elections for fund directors. It would still allow other voting issues, like auditor ratifications, to go to a broker vote. However, last fall, NYSE banned the practice last September of allowing broker votes to be used for new investment management contracts.
"This strengthens shareholder rights," said Mercer Bullard, founder of Fund Democracy.
However, those who oppose ending the practice claim that this will make it much more difficult for fund companies to reach an annual meeting quorum.
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.