Mutual fund advisory firms have a troubling conflict of interest that may cause them to pull their punches in some proxy votes, according to SEC Commissioner Paul R. Carey.

Advisers may have their funds vote on proxy proposals in a manner favorable to company management as part of a bid by the adviser to win business, Carey said in a speech to mutual fund compliance executives and lawyers Dec. 9. For example, an adviser might have its funds make a pro-management vote in a proxy contest in an effort to win or keep the company's retirement money management business, Carey said.

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