Lent securities disclosures at heart of new proxy rule (IGNITES)

The SEC’s new proxy voting rule has required disclosures that are intended to benefit investors with useful information. According to Amy Lynch, FrontLine’s Founder and President, the primary difference between the former rule and its newer version is the disclosure component on lent securities. The total number of shares a fund voted on for a certain issue must be made public, including the number of shares not voted on due to being out on loan. Ms. Lynch explains that firms generally do not want to disclose that a certain percentage of their securities were not voted on because they were on loan. This new aspect in the rule is pointing to fund accountability and their ability to lower fees for shareholders since lending shares creates additional revenue for funds. Previously, it was unknown what the total number of shares, or a percent of shares, were being voted one way or the other, and the new rule now offers greater information to the public on a particular firm’s strategy with its voting. See IGNITES (subscription required), “Ahead of New Proxy Disclosures, Firms Recall Lent Securities”