What is LDV ?

Who benefits from LDV?

LDV benefits all participants in the securities finance industry.  Lenders are better able to exercise their corporate governance responsibilities and, since lenders recall fewer loans, overall securities lending volume and revenue increase.  Loan, borrow, and collateral portfolios are more stable, allowing agents and brokers to more effectively manage investment, counterparty, and operational risks.  Corporate issuers receive more proxy votes from long-term investors, allowing them to reach quorum more quickly and at lower cost, and counterbalance votes of short-term activists.  Higher loan volumes also improve financial market liquidity and price discovery.


What is Lender-Directed Voting, or LDV?

LDV is a new process that matches securities lenders' loaned shares to broker securities that would otherwise go unvoted, enabling lenders to direct proxies without recalling loans.  It substantially improves existing market practices, which require lenders to recall loan in order to vote proxies.  Recalls are inefficient in that they reduce overall lending and borrowing revenue, and create instability in loan, borrow, and collateral portfolios. 

Why haven't lenders voted on loaned shares in the past?

Historically, institutional securities lenders had to forgo voting rights on loaned shares because there was no mechanism to vote without recalls.  Recent technology and transparency improvements in securities finance markets, however, enable loaned shares to be matched with broker shares that would otherwise go unvoted.  In particular, the Agent Lender Disclosure Initiative made apparent the direct counterparty relationship between lenders and broker-borrowers and provided brokers with detailed loan data necessary to include lenders in their proxy allocation routines.

Are there enough unvoted shares to cover lender voting interest?

Approximately 60 billion U.S. equities go unvoted each year[1], while roughly 15 billion shares are on loan[2], suggesting that sufficient votes could be available to meet lender vote demand.  However, it is unlikely that lender voting interest will be fully covered for all issues, such as those with particularly contentious proxy events or that are hard-to-borrow in securities lending markets. 

[1] www.broadridge.com/investor–communications /us/Broadridge_Proxy_Stats_2010.pdf
[2] Data from RMA securities lending composite, assuming $20 average stock price

Does the broker have the lender’s shares on the proxy record date?

1.  U.S. Federal Reserve Regulation T (“Reg T”) defines the permitted purposes for the extension of credit in the borrowing and lending of securities. In general, all of these purposes involve settling trades through re-delivery of the borrowed securities. Most often, the broker’s need to borrow has arisen after failing to receive securities required for an impending trade settlement, either as the result of an operational breakdown or after a short sale.

2.  Given the broker-borrower’s mandatory compliance with Reg T, it can be argued that borrowed shares, which are re-delivered in the settlement of a trade, are not available on the broker’s books (as a technical matter, the position would be held at DTCC) in order to earn voting rights on the proxy record date. However, this argument would only be true per se if the settlement took place on the proxy record date, because an analysis of the ongoing process reveals that the proxy votes, not just the entitled shares, are properly treated as fully fungible on the broker-borrower’s books.

3.  Reg T does not require that the borrowed shares be returned to the original lender when a subsequent receipt of securities is used to offset the original failure-to-receive. At that point, the borrower can certainly return the securities to the original lender. Yet, an active borrower can also compliantly decide to close a loan of the same securities with a different institutional lender whose terms may have become less attractive or from another broker-dealer lender who may be viewed as more likely to recall shares at an inconvenient time in the future, especially if the shares were borrowed for an ongoing short position. Still another reason may exist to hold the securities if the broker considers the return on its cash collateral, received through a rebate from the lender, to be very attractive compared with other investment options. In all those cases, as well as for actively traded issues where there may be a high risk of ongoing settlement failures, the broker can simply keep the newly-received shares in its inventory, balanced against its obligation to the lender.

4. As a result of efficient management of its settlement obligations, a broker – perhaps all brokers – may well have borrowed positions on their books on proxy record dates. The brokers would have gained the right to assign proxies or even to vote at the next corporate meeting as a direct result of the original loans from institutional lenders. In effect, the proxies are fungible on the brokers’ books, along with the borrowed shares themselves subject, of course, to an equitable assignment of proxy rights in compliance with stock exchange rules. Yet, brokers are not expressly permitted to assign proxies to their institutional lenders. At this point, the Lender Directed Voting (“LDV”) argument gains relevance and substance.

5. As noted, in addition to holding the shares cum voting rights, the broker also retains an obligation to its original lender. Indeed, one could argue that an institutional lender's ownership rights are stronger than those of other “beneficial owners” to whom the broker owes shares in the same securities. That is partly due to the distinction that can be drawn between the institutional lenders, who do not receive proxy assignments, and the broker’s own margin customers and hedge fund clients, who do receive proxy assignments. The distinction resides in the timeline of their property rights: the former owned the shares fully prior to lending them to the broker, while the latter required broker-financing in order to acquire their positions. Although we have seen that the institution’s shares may now be on the broker’s books, it is very likely that the financing customers’ shares are out on loan, i.e., hypothecated as collateral to source the broker’s own funding needs. And, in such cases, those positions are truly not in the brokers’ DTC account, although the brokers may well be assigning proxy rights to their accountholders. One can ably argue that those proxies would more equitably be assigned to the institutional lenders.

How can lenders instruct broker shares?

Brokers administer proxy allocation routines to distribute proxies to their customers.  Since broker shares are held in fungible bulk and lenders have beneficial ownership to loaned shares, brokers can include lenders in their allocation routines.  After brokers allocate proxies to lenders, standard proxy processes are followed to garner and submit voting instructions and submit them to corporate issuers.  For example, proxies are assigned to Broadridge accounts designated for the lenders, then are instructed by lenders or ISS on the lenders' behalf.

Could lenders also instruct custodians' unvoted shares?

Regulatory and operational considerations may pose challenges to matching custodians' unvoted shares with lenders’ loan positions.  In particular, custodian shares are not held in fungible bulk, as are broker shares, which presents difficulties when considering custodial allocation of proxies across lender accounts. Furthermore, custodians are not counterparties on loans, so the lenders are not beneficial owners to any of the custodians’ unvoted shares.

Does LDV contribute to “over-reporting,” since lenders’ shares were delivered to new buyers who now have the associated voting rights?

Existing proxy reconciliation processes are sufficient to address any potential "over-reporting" issues.  For example, brokers already use post-reconciliation processes to mitigate the risk of over-reporting that may arise from assigning proxies to margin customers whose shares may have been loaned or rehypothecated.

How do brokers decide which lender(s) are assigned proxies?

Beneficial owners and regulators have expressed concerns about voting opportunities being directed to preferred lenders or leveraged for beneficial loan terms.  In the same way that agent lending queues are designed so that lenders get equitable access to borrower demand, brokers need pre-defined and algorithmic “proxy queues” to ensure equitable assignment of voting opportunities.  Furthermore, on-going auditing and validation of proxy assignments may be needed to ensure against development of a “market for votes.” 

What if proxies are not available from a lender's borrower, but are from another broker?

Reallocation of the loans to brokers with available proxies would increase overall lender voting opportunities.  However, numerous other loan factors would need to be taken into account, such as counterparty risk assessments and credit limits, loan prices, and collateral types and quantity.  Considering these factors, loan reallocations may not be in the overall best interest of lenders and borrowers, and will have to be considered on a case-by-case basis.

How can lenders know, before record date, how many proxies they will be assigned?

To the extent that lenders receive proxies through LDV, they will not have to recall loans to regain voting rights.  However, broker holdings change daily and varying numbers of investors vote, so the number of proxies that can be assigned to lenders cannot be known with certainty until just before the meeting date, which is typically two months after lenders must make record date recall decisions.   The number of available proxies must therefore be forecasted, taking into account factors such as each broker's customer base, the scarcity of shares in the securities lending market, and the expected materiality of proxy ballot items.

Corporate Governance Blog

Tuesday, March 5, 2019

Securities Processing: Big Tasks Lie Ahead

by Ed Blount (Reprinted from the Banking Journal of the American Bankers Association, May 1981)

The nature of the securities business has changed dramatically in the last decade. A full understanding of those changes is necessary in order to appreciate the challenges facing the industry in the Eighties. Impressive strides have been made since the days of the back-office disaster scenes in the late Sixties and early Seventies that forced over 100 brokerage firms to go "belly up." Virtually all major brokers have automated their order entry process. Many have also developed the ability to interface these front-end systems with clearing banks, other brokers, and with industry facilities such as the Trade Comparison Service, Continuous Net Settlement System, and Institutional Delivery System each of which was introduced in the last decade.

 We can date the modern securities operations era from July 1968, when the first trade settlements were processed through the New York Stock Exchange's Central Certificate Service (CCS). This was designed to centralize the storage of stock certificates and process securities deliveries by simply crediting one broker's account and debiting another's. It was somewhat hobbled by the general upheaval in the industry at the time, and by the exclusion of banks from the book entry system.


DTC arrives. An improvement came in 1974, when CCS was succeeded by the Depository Trust Co. (OTC), a joint venture of the brokerage community, the banks, and the New York and American Stock Exchanges. While this participation greatly expanded DTC's prospects over its predecessor, a successful securities depository system would have been impossible without the development of standard identifying codes for the hundreds of thousands of securities traded in the market.

 The necessary numbering scheme, the CUSIP system (named for the Committee on Uniform Security Identification Procedures), was introduced by a bipartisan banking and securities task force in 1969. A complementary program to create a financial institutions numbering system (FINS) followed the successful adoption of CUSIP in the early 1970s.


Automation drive. Armed with these standards, brokers and bankers alike launched an unparalleled drive to improve operations through automation. Industrywide support systems were designed and introduced during the same period that most institutions were wrestling with the automation of their general ledgers.

The problem of redundant New York clearing facilities was resolved during this period through formation of the National Securities Clearing Corp. by the NYSE, AMEX, and National Association of Securities Dealers. One NSCC facility the Trade Comparison Service, spotted inconsistencies in the buy and sell sides of a trade as reported by participating brokers. Another NSCC facility, Continuous Net Settlement, reduced all trades among participants to a single plus or minus position for each issue in the member's depository account.

The Institutional Delivery System (ID), a DTC service, automated confirmation of trades, and simplified the instruction entry process to the depository.


Other depositories. Overseas, Morgan Guaranty Trust created Euroclear to act as a Brussels-based depository and clearing facility for foreign securities. Not to be outdone, a consortium of European banks established CEDEL in Luxembourg to compete with Euroclear.

Domestic market competition also surfaced when the regional stock exchanges established their own central securities depositories. However, even the largest of these, the Midwest and the Pacific depositories, have yet to achieve a small fraction of the support received by their New York counterpart.

Despite this aggressive competition, a variety of steps were taken during the Seventies to tie market participants closer together for the benefit of the investor community.

By act of Congress, the Securities and Exchange Commission was charged with responsibility for fostering creation of a National Market System. In view of all the controversy over such a system, the SEC understandably has taken a go-slow course of action.

Other steps in this direction have yielded similarly conservative results. Instinet, a privately developed network for direct trading among institutional investors, has not achieved the customer activity base necessary to provide the liquidity such a block trading market requires. And the Intermarket Trading System, intended to offer the best possible execution price for trades in NYSE-listed securities on participating exchanges, has also achieved only modest support to date.

Note the focus on institutions, not individuals, and this brings us to the core of the challenge.


Trading explosion. Institutions have largely supplanted individuals as the chief traders and trading activity has not merely increased; it has exploded. Money managers looking for the "fast horses" have moved in and out of positions so quickly that bank transfer agents had hardly reregistered the securities when the bank clearing agents were forced to re-deliver the same securities to another custodian bank.

The impact on the securities operations areas of the large New York banks has been monumental. Item processing volumes often exceeded plan by a factor of five. Turnaround slowed to a crawl. Certificates sent in for transfer never came out. Record-keeping disciplines slipped, particularly when the banks tried to install new computer systems between volume peaks.

The problem was compounded when many of the large New York agent banks recognized an opportunity to provide a new service to their correspondents after the creation of OTC. Since the basic service charges for the depository were higher than most regional banks could justify, the agent banks deposited their correspondents' securities into DTC with their own holdings. The fixed costs of participation were spread over a larger base through this "piggyback" service.


Paper pile up. The effect was an even greater increase in transaction activity at the New York banks, and for piggyback trading, an extra set of hands in the settlement cycle. These hands often turned out to be so busy shuffling paper that they misplaced trades or dropped income payments. The problem was more complex than simply volume, however.

In their unending search for the front runners, the money managers moved into options, Ginnie Maes, futures, foreign securities and securities lending. Now they were not only burying the banks in volume, but also tying them up in complicated, unfamiliar investment vehicles.


Who's on first. Ginnie Maes earned themselves a place in the Trust Operations' Hall of Infamy as a result of the unpredictable nature of their monthly pay-downs (mortgage payment pass-throughs). Options required special safeguards to ensure that the underlying pledge securities were not sold. As to foreign securities, where do you hold them? How do you find out about calls, dividends, or corporate actions?

The speed at which formerly satisfactory accounting and record-keeping systems became obsolete was dazzling.

Regional trust departments, conditioned to clipping coupons and collecting dividend checks for Aunt Matilda's $700,000 personal trust, were suddenly faced with the spectre of $150 million in hot money from the Amalgamated Widget employee benefit fund. The operations impact, particularly the requirement for sophisticated tracking and reporting, could be traumatic, to say the least.


Survey results. A multi-sponsor study of the level of automation among the nation 's 500 largest trust departments was recently conducted by the ASTEC Consulting Group for Dun & Bradstreet. According to Clifford J. Brundage, director of marketing at D&B's Business Economics Division, "We found that only 2% of the largest trust institutions had not automated the accounting function. In addition, the research clearly shows a strong trend toward a shorter life cycle for these systems, primarily as a result of the ever-increasing demands from their customers for more complex reports and analysis."

But Figure 1 shows some results of the study that are far less encouraging. Note that two-thirds of the banks surveyed - again, the nation 's largest - have not automated the securities movement and control function. This process, which controls securities transactions from execution through settlement (usually five days) becomes more critical as trading volumes increase. Furthermore, lack of an automated securities movement system will prevent a bank from participating in many of the improvements planned for the industry over the next few years.


Institutional demands. We also see from Figure 1 that two functions closely associated with institutional accounts – performance measurement and employee benefit trust participant accounting (employee record-keeping) – have achieved high levels of automation within these banks. What might be even more significant, however, is the fact that better than four of every five banks surveyed were compelled to provide these services in one form or another, automated or manually. Clearly, the institutional account has assumed a major role in the trust industry.

The turmoil created by the special requirements of these accounts is serious. One bank in four installed a new accounting system in the last two years. Almost half are four years old or less. The study further revealed that another 32% were dissatisfied with their current systems and planned to replace them in the next two years.


What are the implications? Anyone who has survived the installation of a complex securities system in a bank should be able to appreciate the often cataclysmic disruption caused by such a conversion. Without doubt, banks will be very busy over the next few years.

Higher and higher. As if all this system work were not enough, the trading activity forecast by the NYSE is for a continuous string of broken records through 1985. By 1984, the NYSE considers a high day of 173 million shares a reasonable probability. This may appear astronomical, but we should not lose sight of the market's habit of making acrobatic leaps to ever higher plateaus.

Some of that increase, however, may be absorbed by a continuation in the long-term trend toward larger trading blocks. From the standpoint of a bank securities operations a rea, the transaction activity level is a more accurate barometer of operational strain. While the increase in transactions will not rise as dramatically as share volume, most knowledgeable estimates place the rate of item processing growth in the vicinity of 10% compounded annually.

If, however, interest rates drop and stabilize in single digit levels, much of the $100 billion in money market funds could flood the equity markets on "repatriation." In that event, all bets are off on trading volume predictions.


The prognosis. Several other trends can be foreseen.

(1)        The role of institutional investors won't diminish in the near future.

(2)        Trades which fail as a result of poor communication between the unprecedented number of parties in the trading and settlement process will continue to cost bank operations officers headaches and interest charges.

(3)        The introduction of new systems at almost one-third of the industry's largest banks will force them to focus internally at the expense of expanding their participation in the depositories, net settlement systems, and other industry support facilities.

(4)        The shortage of trained personnel will be a major concern.

(5)        The institutional customer's interest in maximum portfolio performance, coupled with probable imposition of legislative or regulatory guidelines, will eliminate all vestiges of float earnings on fails income, and free cash balances.

(6)        Exotic investment vehicles will play an ever larger part in the portfolios of aggressive institutional customers.

(7)        The trend toward centralization of securities certificates in depositories will expand.


Support facilities. Fulfillment of many of these trends will place a substantial obligation on the banks to make full use of the support facilities available to them. Yet in the eyes of some industry leaders, the pace at which banks have moved to accept these facilities is disappointingly slow.

"Continuous Net Settlement can tremendously simplify the clearance and settlement process," says Jack Nelson, president of NSCC, "and make participants virtually insensitive to volume fluctuations. Although most major brokers use the system, only one bank is currently aboard."


Tools are there. According to Conrad Ahrens, president of DTC, "The 'DK' problem, where a bank or broker can't identify a transaction before settlement date, is in our opinion the most important single issue facing the industry today. While we can reduce the impact of volume through use of the depository system, the settlement process cannot start in time unless more participants use accelerated trade identification and communication facilities such as the Institutional Delivery System."

DTC, with the support of the brokerage community and many of the larger banks, has started a program to stimulate wider use of the ID system. While this has improved participation in the system, the results of the D&B study indicate disappointingly low usage among the largest trust departments. Only 42% of the banks surveyed reported using the system for any discretionary trades (initiated by the bank's own investment advisory group) and 40% for any directed trades (by outside money managers). Even within this group, however, the success rate was low: banks who did use the system were able to include on average only 25% of their discretionary trades and 20% of their directed trades.


Slow communications. Similarly, Figure 2 shows the low utilization of advanced communication media for trade settlement instructions.

Despite the fact that depositories and practically every large agent bank offer timesharing terminals with direct instruction capability, only 12% of the banks surveyed use this service. Computer-to-computer links, which require more sophistication on the part of the user, are employed by fewer than 8% of these institutions. Expensive, labor-intensive and relatively inefficient methods such as the mails, telephones, and facsimile transmission are used as the primary instruction method by more than three-quarters of these large institutions.

One automated approach which may represent the next generation in trade instruction processing is based on an interface between a regional bank's trust accounting system and its agent bank's trade settlement system. Morgan Guaranty has developed such an interface over the past two years in concert with SEI Corp.

"Our correspondents are able to create a transaction in their accounting system and forward an instruction into our settlement system with the same terminal entry," says Peter D. S. Dale, senior vice president at Morgan. "This linkage not only reduces their operations workload, it improves quality and accelerates turnaround time."


Certificates are fossils. In any discussion of securities processing, however, one key handicap remains glaringly evident. The entire system remains based on an incredibly cumbersome anachronism, the securities certificate. Many calls have been made for its elimination, yet it defiantly endures.

Eliminating the millions of certificates scattered around the country would be a gargantuan task, but at long last, the timing may now be right.

"With the massive concentration of certificates in DTC, we have an opportunity to follow the example of the mutual funds and abolish the certificate at a stroke," says Walter

H. Cushman, senior vice president at Bank of New York and chairman of the ABA's Securities Processing Committee. "The actual proof of ownership resides on the books of the transfer agent, so a simple confirmation of title should be sufficient for most transactions."

All of these tasks represent formidable challenges in bank securities operations. The key to meeting the challenge lies not in computer hardware or software, but in an appreciation of the complex interrelationships in the securities industry. At a certain level, each participant may be considered a customer of the other.


Corporate Outreach Milestones


May 8, 2014: Council of Institutional Investors; - CII Elects New Board, Names Jay Chaudhuri Board Chair. http://www.bloomberg.com/news/2014-01-31/north-carolina-treasurer-may-cede-pension-control-5-questions.html )

February 2014:  Swiss Minder Initiative implies the value of LDV. http://www.ipe.com/switzerlands-minder-initiative-will-cripple-securities-lending-experts-warn/10000947.article.

January 2014FL SBA begins their SecLending Auction Program with eSecLending.

November 27, 2013 – CSFME staff call with Glass Lewis Chief Operating Officer. He gave his commitment for cooperation and support for LDV, and most importantly, he suggested that perhaps we should discuss with a Broadridge/State Street/Citi the scenario that permits Citi to forward an “Omnibus Ballot” of proxies to State Street, which State Street would then take and assign the proxies to their pension lenders/LDV participants, which would then be incorporated into a single ballot and sent to Broadridge. This eliminates the secondary ballot issue. While this description is oversimplified, Glass Lewis was fairly certain the parties involved could operationally create such a combined ballot. Responding to the question on cost, the Glass Lewis executive stated that the cost depends on the number of voting policies a fund has. Most funds have one policy; therefore, depending on the client, the cost would be $.75 – $2.00 per ballot.

October 21, 2013 – CSFME staff call with ISS Chief Operations Officer. He committed his cooperation and support to advance LDV’s implementation into the markets. He responded to the question about cost: “It depends on the client and the services they use. $6-7 per ballot on average.”

June 25-28, 2013 – CSFME staff attended ICGN Annual Conference in NY, NY. Spoke with executives of CalSTRS; ICGN Chair and Blackrock about LDV.  We received favorable comments and encouragement from each.

June 6, 2013: CSFME meets with Chief Investment Officer for NYC Pension Funds. While very much in favor of the LDV concept, the comments that the NYC Pension Fund Boards are for the most part followers in new initiatives and would prefer a roll-out by other funds first.

April 5, 2013: ‘SEC gives CSFME limited approval for LDV going forward’ providing brokers assign proxies only from their proprietary shares.

March 26, 2013 – CSFME and its legal team presented the case for LDV to SEC Commissioner Dan Gallagher. Present by phone and speaking on behalf of LDV were representatives of FL SBA who spoke about the difficulty of timely recall of shares on loan following release of record date and issues on agenda; and a representative from CalSTRS who spoke about their recall policy affecting income.

March 13, 2013 – CSFME meet staff of Senator Rob Portman and Congressman Steve Stivers of Ohio. These meetings were for the purpose of lining up political support, should the SEC resist the LDV concept. We also met and spoke with CII Deputy Director Amy Borrus for one hour and 15 minutes for a scheduled 30 minute meeting.  She expressed great interest in the value of LDV to long-term beneficial owners.

January 17, 2013 – CSFME conference call with CoPERA Director of Investments.  Among CoPERA’s concerns were: (1) How are agents/brokers notified re: LDV? (2) Who moves or approaches first lender to agent or agent to lender? CSFME responds  that a side letter is needed between lender, agent and broker.

November 8, 2012 – CSFME conference call with Council of Institutional Investors (CII) detailing LDV. Some in attendance were opposed to securities lending because of their desire to vote 100% of recall. This position would be irrelevant giving CalSTRS’ change to policy on proxy recall.

October 24, 2012, 2PM – CSFME presents LDV to Broadridge Institutional Investor Group. At this meeting, a representative of CalSTRS states: “We would view brokers willing to provide proxies more favorably than those who would not.” We were also informed by CalSTRS that they were looking to change their 100% recall policy. A representative of SWIB led a discussion on International Voting Issues, and apparently was chairing 3 meetings to determine the following: 1. who is voting internationally? 2. What are the issues in the international markets? 3. How do we increase and improve international processes?

October 24, 2012, 11AM – EWB/KT conference call with ICGN.  Executives stated that the argument for LDV may not be as strong in a non-record date market, and asked what would be the cost for LDV.  They further stated that they would like to see the U.S. go with LDV first and would need more information and operational detail.

October 13, 2012 email note from Elizabeth Danese Mozely to Broadridge’s Institutional Investor Working Group: “TerriJo Saarela, State of Wisconsin Investment Board, will provide commentary on their fund’s interest in international voting and an update on her participation in the Council of Institutional Investors’ working group on international voting.  Our discussion will include the differences in process for voting abroad, share blocking, attendance at the meeting via proxy or Power of Attorney (POA), best practices available through the various laws and regulations, etc.”

September 18, 2012: CSFME contacts Blackrock/ICGN Chair for a brief on LDV.

August 13, 2012 – CSFME conference call with OTPP.  Discussion of LDV was not timely in that their SecLending Program stopped lending securities through agents in mid-2006. State Street is their custodian and they were using a tri-party repo through Chase to Lehman, until the Lehman collapse. All the assets sat at Chase. It was not clear who had voting rights. At the time of this discussion in August 2012, OTPP was thinking formulating an SLA because they do not have the capacity to lend securities on their own. We have had no discussion with them since.

August 2, 2012 – CSFME contacts Ontario Teachers’ Pension Plan (OTPP) regarding LDV.

March 19, 2012 – CSFME conference call with executive in charge of securities lending for Franklin Templeton

February 22, 2012ICGN sends LDV letter of support to the SEC, signed by Chairman of the ICGN Board of Governors.

September 30, 2011CalSTRS sends LDV letter of support to the SEC, signed by Director of Corporate Governance Anne Sheehan.

July 18, 2011Florida SBA sends LDV letter of support to the SEC, signed by Executive Director and Chief Investment Officer.

November 2011 – CSFME introduces Council of Institutional Investors editor to LDV.

July 5, 2011 – CSFME sends a Comment Letter to the Securities and Exchange Commission regarding LDV.

October 2010 – CSFME releases report: Borrowed Proxy Abuse: Real or Not? This report and the SEC’s Securities Lending and Short Selling Roundtable prompted the question from beneficial owners and regulators regarding the need to recall shares on loan to vote proxies, why can’t lenders receive proxies for shares on loan when we get the dividends? From this question, the idea for Lender Directed Voting was born.

January 2010 – SEC issues rules that brokers no longer have the discretion to vote their customers’ shares held in companies without receiving voting instructions from those customers about how to vote them in an election of directors. http://www.sec.gov/investor/alerts/votingrules2010.htm. The rule, periodically, contributed to the difficulty of corporate meetings attaining a quorum.

Fall 2009/2010 – Four public pension funds join CSFME in Empty Voting studies/LDV initiative; FL SBA, CalSTRS, SWIB and CoPERA.

September 29-30, 2009 - SEC Announces Panelists for Securities Lending and Short Sale Roundtable; http://www.sec.gov/news/press/2009/2009-207.htm