Keeping secrets doesnt make for good friends, and mutual fund boards have been losing friends since September, thanks to secret trades. Now they have figured out a way to perhaps earn some of those friends back by disclosing proxy vote results. More accurately, they are simply following a new rule by the Securities and Exchange Commission. Mutual fund companies will soon start reporting the results of proxy votes, meeting the SEC imposed Aug. 31 deadline that requires the disclosure, The Wall Street Journal reports.
It is expected that the disclosures will allow investors and their supporters to figure out the voting trends in the mutual fund industry, although it is impossible to know whether the voting tendencies will have changed amid the public forum.
"We will have this vast new storehouse of information to mine," said Juliet Gorte, who directs social research at the already full-proxy-vote-disclosure fund company Calvert Group Ltd.
The key reason for the change from private to public proxy voting is to eliminate conflicts of interest. One example would be a fund company that manages a firms 401(k) plan being scared to vote against the wishes of that company, fearing that the firm would fire it as 401(k) administrator. Public disclosure would call them out on any vote that could harm investors, thus making such situations obsolete.
Industry expert and Baruch College Accounting Professor Burton Rothberg said the new proxy disclosure should help business, especially investors. "You would expect now that mutual funds have to disclose their votes, they are going to take greater care on analyzing these issues of governance and vote carefully," Rothberg said.