2018: Great Year for Retail Investors, More to Come in 2019

December 31, 2018

Since the launch of the Main Street Investors Coalition in May, many positive developments have transpired for retail investors. America’s retail investors are rightly concerned about how their investments are managed, given the proliferation of investor activism and environmental and social resolutions that have radically shifted the investment landscape.

As 2019 draws to a close, the U.S. Securities and Exchange Commission (SEC) Chairman Jay Clayton has committed to regulating proxy advisory firms, a key victory for retail investors who are concerned about how their money is being used. There has also been bipartisan legislation introduced and debated in the U.S. Senate that shows growing consensus that proxy advisors need additional oversight. Ahead of the SEC roundtable, the Commission rescinded the 2004 ISS and Egan-Jones no-action letters which essentially allowed institutional investors to rely on the advice of proxy advisory firms and uphold their fiduciary duty to act in their clients’ best interests without doing their own due diligence.

These changes have centralized decision-making regarding corporate governance for publicly listed companies at a time when companies are facing resolutions that wade into more controversial and politically oriented issues. When asked, most retail investors affirm that they do not want institutional investors to promote social or political causes with their money, instead they want their fund managers to maximize their investments.

How Main Street Investors Informed the Debate

To inform the broader public, the U.S. Congress and the SEC about the issues facing retail investors, members of the Main Street Investors Coalition released numerous reports this year:

Members of the Main Street Investors Coalition also wrote to the SEC to inform the Commissioners of issues with the proxy process that will be used to help develop rules overseeing the process:

Main Street Investors Will Continue to Push for Reform in 2019

The Main Street Investors Coalition looks forward to another productive year in 2019 as the SEC moves forward with a proposal to rein in proxy advisory firms. The Coalition will continue to inform the debate and ensure that whatever proposal is put forward forces more transparency onto proxy advisory firms to mitigate conflicts of interest and ensure all recommendations are based on accurate data.

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