The Office of Management and Budget approved the Securities and Exchange Commissions rule requiring mutual funds to publicly disclose proxy votes, handing a setback to the $6 trillion fund industry, Reuters reports.
Funds will have to start recording their proxy votes beginning July 1 and disclose their 12-month voting records ended July 1, 2004 starting Aug. 31, 2004, according to the SEC.
"Disclosing proxy voting could eliminate potential conflicts of interest and may encourage funds to become more engaged in corporate governance reform, which will benefit all investors," SEC spokesman John Nester told Reuters.
OMB was required under the Paperwork Reduction Act to review the rule, but because the SEC is an independent regulatory agency, even if OMB had decided to question the SEC rule, which it did not, its recommendations would not have been binding, OMB spokesman Trent Duffy said.
There was some hope in the industry that OMB would ask the SEC to conduct further cost/benefit analysis, therefore delaying or even nixing the rule ( see MFMN 3/10/03).