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News September 13, 2004 Issue

Proxy Reporting Hits Snags; GAO Issues Report

Whatís with the dozens and dozens of amended Form N-PXs filed in the past two weeks, following the August 31 deadline?

Some fund groups may be discovering that filing the form wasnít so simple after all. And IM Insight is hearing tales of proxy voting service providers that did not vote proxies that they were supposed to.

In other proxy news, the Government Accountability Office (GAO) last week released a report urging Congress to amend ERISA to address the way plan fiduciaries vote proxies. The report, "Pension Plans: Additional Transparency and Other Actions Needed in Connection with Proxy Voting," was requested by Senator Edward Kennedy (D-MA) nearly a year ago. GAO found that some plan fiduciaries have taken steps to manage conflicts by adopting proxy voting procedures and/or by disclosing proxy votes. The GAO also concluded that DOLís enforcement efforts related to proxy voting have been limited, and that the agency has devoted few resources to the issue.

"To better protect the interest of plan participants," said GAO, Congress should amend ERISA to require that plan fiduciaries:

  • develop and maintain written proxy-voting guidelines;
  • include language in voting guidelines on what actions the fiduciaries will take in the event of a conflict of interest; and
  • annually disclose votes and voting guidelines to plan participants, beneficiaries, and "possibly" the public.