Dissecting the SEC’s Recent Guidance on Investment Adviser Proxy Voting Responsibilities

The SEC recently provided guidance to investment advisers on how they can fulfill their proxy voting responsibilities. The guidance discusses, among other topics, how an investment adviser can agree upon the scope of its authority and responsibilities to vote proxies on behalf of clients; what steps an adviser must take to demonstrate that it is making voting determinations in clients’ best interests and in accordance with its policies and procedures; how an adviser should evaluate a proxy advisory firm, both prior to engagement and during engagement; and what steps an adviser should take in the event that it becomes aware of a proxy advisory firm’s errors. To help readers understand issues related to the SEC’s proxy voting guidance, the Hedge Fund Law Report interviewed Paulita A. Pike, partner in Ropes & Gray’s asset management group. This article presents her insights. For a summary of the guidance, see “SEC Issues Guidance on Proxy Voting Responsibilities of Investment Advisers” (Oct. 10, 2019). For additional commentary from Ropes attorneys, see our three-part series on subscription credit facilities: “Their Popularity and Usage Soar Despite Concerns Raised by Certain Members of the Private Funds Industry” (Mar. 1, 2018); “Principal Advantages and Key Points to Negotiate in the Credit Agreement” (Mar. 8, 2018); and “Key Concerns Raised by Investors and the SEC” (Mar. 15, 2018).

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