WASHINGTON, D.C. — U.S. Representative Zach Nunn (IA-03) passed legislation late last night through the House Financial Services Committee protecting investment saving accounts from politically-motivated investing that reduce returns for Iowans.
“Inflation and rising costs have made it harder and harder to save for retirement, which is why I pushed for this legislation to maximize Iowans’ retirements savings,” Rep. Nunn said. “Investment decisions should be made to maximize returns, not reward companies for their policies or political views. This legislation ensures profits are driving decisions.”
Under current law, investment managers may make investment decisions based on a company’s policies or political views, rather than maximizing returns for the original investor. In fact, just two consulting companies are making these decisions on 97% of the shareholder votes nationwide, and corporations and asset managers accept this advice without even reviewing the recommendations through a method called robovoting. Often, these two consulting companies have financial or political conflicts of interest that are never disclosed to the original investor. Accounts managed this way see an average of 14% decrease in returns.
The Protecting Retirees’ Savings Act would eliminate these conflicts of interest for financial managers by:
- Requiring the Securities and Exchange Commission (SEC) to issue final rules prohibiting the use of robovoting with respect to votes related to proxy or consent solicitation
- Prohibiting institutional investors from outsourcing voting decisions with respect to votes related to proxy
- Removing requirements to vote, so no one would be required to cast votes related to proxy
The Protecting Retirees’ Savings Act was passed as part of the Protecting Americans’ Retirement Savings from Politics Act.
This bill’s passage comes on the heels of Rep. Nunn passing four other bills through the House Financial Services Committee. He has now had five bills passed by the Financial Services Committee.