Proxy advisory firms streamline research and analysis to reduce the cost to

pension recipients and retail investors. While most investors utilize proxy advisory

services, the fact remains that investors make their own voting decisions; they do not

just follow proxy advisors’ voting recommendations. Indeed, most investors rely on

proxy advisors for research, analysis and data—not on their voting recommendations.

In any event, no investor is forced to hire proxy advisors, and no investor is forced to

follow their recommendations. Their role enhances efficiency, transparency, and

informed voting, while final authority always rests with the investor. Proxy advisors

thus serve as a resource—not a replacement—for investors’ own decision-making

processes.

Preserving investor choice and access to independent research is essential to

protecting fiduciary responsibilities and shareholder rights. Given that, it is

especially noteworthy that institutional investors—those who use proxy advisors’

research and services—are not calling for more regulation. Investors, after all, are

the best judge of the quality and reliability of proxy advisors’ research and data. Yet

by a more than two-to-one margin, institutional investors oppose additional

regulation of proxy advisors. Investors prefer a market-based approach whereby they

are free to choose among proxy advisors, to ignore their recommendations or not use

them at all.

H.B. 1273 and the other management-driven state laws being enacted

alongside it are solutions in search of a problem. The supposed “consumer protection”

rationale their proponents push is a smokescreen. Under the cover of that specious

rubric, they would seriously impair the ability of many institutional investors to

secure the independent research and analysis of corporate ballot items needed to

fulfill their fiduciary duties to beneficiaries, hold management to appropriate

account, and ensure the best long-term prospects to building shareowner value. At

the same time, increased costs due to regulations like H.B. 1273 will be passed along

to investors and ultimately borne by pension beneficiaries and retail investors, all

while more regulation raises the barrier to entry, resulting in fewer proxy advisors.

Institutional investors do not want, did not ask for, and do not need such “protection.”

For these reasons, amicus curiae the Council of Institutional Investors

respectfully requests that the Court affirm the ruling of the district court below.

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