A Twenty-Year Journey to Transparency

Securities Lending Versus Proxy Voting

Securities lending has proven the most challenging aspect of shadow banking for regulators to bring under a regulatory rubric. One of the most vexing aspects for regulators is proxy voting by securities lenders or, more particularly, the lenders' decision processes about whether to recall lent securities to vote their proxies and forego the lending income. The calculus about whether to forego lending income in favor of exercising the right to vote relies on so many factors that regulators are hesitant to second-guess. Nonetheless, investors in lenders like mutual funds have a right to know how investment managers make these decisions. And now, the enormous demand for ESG investing is driving an intensifying interest in how funds are managing governance decisions. Perhaps it is time to explore more active metrics to avoid what could be more needless and ultimately unhelpful disclosure to shareholders. 

Monday, November 1, 2021/Author: David Schwartz J.D. CPA/Number of views (2883)/Comments (0)/
Tags:
RSS
First891011121314151617Last