43168 Federal Register / Vol. 87, No. 137 / Tuesday, July 19, 2022 / Rules and Regulations 

1Unless otherwise noted, when we refer to the 

Exchange Act, or any paragraph of the Exchange 

Act, we are referring to 15 U.S.C. 78a of the United 

States Code, at which the Exchange Act is codified, 

and when we refer to rules under the Exchange Act, 

or any paragraph of these rules, we are referring to 

title 17, part 240 of the Code of Federal Regulations 

[17 CFR 240], in which these rules are published. 

2See Exemptions from the Proxy Rules for Proxy 

Voting Advice, Release No. 34–89372 (July 22, 

2020) [85 FR 55082 (Sept. 3, 2020)] (‘‘2020 

Adopting Release’’). For purposes of this release, we 

refer to persons who furnish proxy voting advice 

covered by 17 CFR 240.14a–1(l)(1)(iii)(A) (‘‘Rule 

14a–1(l)(1)(iii)(A)’’) as ‘‘proxy voting advice 

businesses,’’ which we abbreviate as ‘‘PVABs.’’ See 

17 CFR 240.14a–1(l)(1)(iii)(A). Rule 14a– 

1(l)(1)(iii)(A) provides that the terms ‘‘solicit’’ and 

‘‘solicitation’’ include any proxy voting advice that 

makes a recommendation to a security holder as to 

its vote, consent, or authorization on a specific 

matter for which security holder approval is 

solicited, and that is furnished by a person that 

markets its expertise as a provider of such proxy 

voting advice, separately from other forms of 

investment advice, and sells such proxy voting 

advice for a fee. Id. 

3 17 CFR 240.14a–9, note (e). 

SECURITIES AND EXCHANGE 

COMMISSION 

17 CFR Parts 240 and 276 

[Release Nos. 34–95266; IA–6068; File No. 

S7–17–21] 

RIN 3235–AM92 

Proxy Voting Advice 

AGENCY: Securities and Exchange 

Commission. 

ACTION: Final rule. 

SUMMARY: We are adopting amendments 

to the Federal proxy rules governing 

proxy voting advice as part of our 

reassessment of those rules and in light 

of feedback from market participants on 

those rules, certain developments in the 

market for proxy voting advice, and 

comments received regarding the 

proposed amendments. The 

amendments remove a condition to the 

availability of certain exemptions from 

the information and filing requirements 

of the Federal proxy rules for proxy 

voting advice businesses. The release 

also rescinds certain guidance that the 

Commission issued to investment 

advisers about their proxy voting 

obligations. In addition, the 

amendments remove a note that 

provides examples of situations in 

which the failure to disclose certain 

information in proxy voting advice may 

be considered misleading within the 

meaning of the Federal proxy rules’ 

prohibition on material misstatements 

or omissions. Finally, the release 

discusses our views regarding the 

application of that prohibition to proxy 

voting advice, in particular with respect 

to statements of opinion. 

DATES: The amendments and the 

rescission of the guidance are effective 

September 19, 2022. 

FOR FURTHER INFORMATION CONTACT: 

Valian Afshar, Special Counsel, Office 

of Mergers and Acquisitions, Division of 

Corporation Finance, at (202) 551–3440, 

regarding the amendments, and 

Thankam A. Varghese, Senior Counsel, 

Chief Counsel’s Office, Division of 

Investment Management, at (202) 551– 

6825, regarding the rescission of the 

guidance, U.S. Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549. 

SUPPLEMENTARY INFORMATION: We are 

adopting amendments to 17 CFR 

240.14a–2 (‘‘Rule 14a–2’’) and 17 CFR 

240.14a–9 (‘‘Rule 14a–9’’) under the 

Securities Exchange Act of 1934 [15 

U.S.C. 78a et seq.] (‘‘Exchange Act’’).1

Table of Contents 

I. Introduction 

II. Discussion of Final Amendments 

A. Amendments to Rule 14A–2(B)(9) 

1. Proposed Amendments 

2. Comments Received 

3. Final Amendments 

4. 2020 Supplemental Proxy Voting 

Guidance 

B. Amendment to Rule 14A–9 

1. Proposed Amendment 

2. Comments Received 

3. Final Amendment 

III. Other Matters 

IV. Economic Analysis 

A. Economic Baseline 

1. Affected Parties and Current Market 

Practices 

2. Current Regulatory Framework 

B. Benefits and Costs 

1. Benefits 

2. Costs 

C. Effects on Efficiency, Competition, and 

Capital Formation 

D. Reasonable Alternatives 

1. Interpretive Guidance Regarding 

Whether Systems and Processes Satisfy 

the Rule 14a–2(b)(9)(ii) Conditions 

2. Exempting Certain Portions of PVABs’ 

Proxy Voting Advice From Rule 14a–9 

Liability 

V. Paperwork Reduction Act 

A. Background 

B. Summary of Comment Letters on PRA 

Estimates 

C. Burden and Cost Estimates for the Final 

Amendments 

1. Impact on Affected Parties 

2. Aggregate Decrease in Burden 

3. Decrease in Annual Responses 

4. Incremental Change in Compliance 

Burden for Collection of Information 

5. Program Change and Revised Burden 

Estimates 

VI. Final Regulatory Flexibility Analysis 

A. Need for, and Objectives of, the Final 

Amendments 

B. Significant Issues Raised by Public 

Comments 

C. Small Entities Subject to the Final 

Amendments 

D. Projected Reporting, Recordkeeping, and 

Other Compliance Requirements 

E. Agency Action To Minimize Effect on 

Small Entities 

Statutory Authority 

I. Introduction 

In 2020, the Securities and Exchange 

Commission (the ‘‘Commission’’) 

adopted final rules regarding proxy 

voting advice (the ‘‘2020 Final Rules’’) 

provided by proxy advisory firms, or 

proxy voting advice businesses 

(‘‘PVABs’’).2 The 2020 Final Rules, 

among other things, did the following: 

• Amended 17 CFR 240.14a–1(l) 

(‘‘Rule 14a–1(l)’’) to codify the 

Commission’s interpretation that proxy 

voting advice generally constitutes a 

‘‘solicitation’’ subject to the proxy rules. 

• Adopted 17 CFR 240.14a–2(b)(9) 

(‘‘Rule 14a–2(b)(9)’’) to add new 

conditions to two exemptions (set forth 

in 17 CFR 240.14a–2(b)(1) and (3) 

(‘‘Rules 14a–2(b)(1) and (3)’’)) that 

PVABs generally rely on to avoid the 

proxy rules’ information and filing 

requirements. Those conditions include: 

Æ New conflicts of interest disclosure 

requirements in 17 CFR 240.14a– 

2(b)(9)(i) (‘‘Rule 14a–2(b)(9)(i)’’); and 

Æ A requirement in 17 CFR 240.14a– 

2(b)(9)(ii) (‘‘Rule 14a–2(b)(9)(ii)’’) that a 

PVAB adopt and publicly disclose 

written policies and procedures 

reasonably designed to ensure that (A) 

registrants that are the subject of proxy 

voting advice have such advice made 

available to them at or prior to the time 

such advice is disseminated to the 

PVAB’s clients and (B) the PVAB 

provides its clients with a mechanism 

by which they can reasonably be 

expected to become aware of any 

written statements regarding its proxy 

voting advice by registrants that are the 

subject of such advice, in a timely 

manner before the security holder 

meeting (the ‘‘Rule 14a–2(b)(9)(ii) 

conditions’’). 

• Adopted Note (e) to Rule 14a–9, 

which prohibits false or misleading 

statements, to include examples of 

material misstatements or omissions 

related to proxy voting advice. 

Specifically, Note (e) to Rule 14a–9 

provides that the failure to disclose 

material information regarding proxy 

voting advice, ‘‘such as the [PVAB’s] 

methodology, sources of information, or 

conflicts of interest,’’ may, depending 

upon particular facts and circumstances, 

be misleading within the meaning of the 

rule.3

The amendments to Rules 14a–1(l) 

and 14a–9 became effective on 

November 2, 2020. The conditions set 


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4 Id. at 55122. Institutional Shareholder Services, 

Inc. has filed a lawsuit challenging the 2020 Final 

Rules. See Institutional Shareholder Services, Inc. 

v. SEC, No. 1:19–cv–3275–APM (D.D.C.). In 

addition, on Oct. 13, 2021, the National Association 

of Manufacturers and Natural Gas Services Group, 

Inc. filed a lawsuit arising out of a statement issued 

by the Division of Corporation Finance on June 1, 

2021 regarding the 2020 Final Rules. See National 

Association of Manufacturers et al. v. SEC, No. 

7:21–cv–183 (W.D. Tex.); see also infra note 18 

(discussing the Division of Corporation Finance’s 

June 1, 2021 statement). 

5 2020 Adopting Release at 55082. 

6 Id. at 55083 (noting that institutional investors 

and investment advisers generally retain PVABs to 

‘‘assist them in making voting determinations on 

behalf of their own clients’’ as well as ‘‘other 

aspects of the voting process, which for certain 

investment advisers has become increasingly 

complex and demanding over time’’). 

7 Id. at 55085. 

8 Id. at 55082, 55112. 

9See Proxy Voting Advice, Release No. 34–93595 

(Nov. 17, 2021) [86 FR 67383 (Nov. 26, 2021)] 

(‘‘2021 Proposing Release’’). 

10 Id. at 67384. 

11 Id. 

12 Id. 

13 Id. 

14Supplement to Commission Guidance 

Regarding Proxy Voting Responsibilities of 

Investment Advisers, Release No. IA–5547 (July 22, 

2020) [85 FR 55155 (Sept. 3, 2020)]. 

15 2021 Proposing Release at 67388–89. 

16 Id. at 67390. 

17See generally letters submitted in connection 

with the 2021 Proposed Amendments, available at 

https://www.sec.gov/comments/s7-17-21/ 

s71721.htm. Unless otherwise specified, all 

references in this release to comment letters are to 

comments submitted on the 2021 Proposed 

Amendments. 

18On June 1, 2021, the Division of Corporation 

Finance issued a statement that it would not 

recommend enforcement action based on the 2020 

Final Rules (or on a related 2019 interpretive 

release discussed further infra note 165 and 

accompanying text) during the period in which the 

Commission was considering further regulatory 

action in this area. Division of Corporation Finance, 

Statement on Compliance with the Commission’s 

2019 Interpretation and Guidance Regarding the 

Applicability of the Proxy Rules to Proxy Voting 

Advice and Amended Rules 14a–1(1), 14a–2(b), 

14a–9, U.S. Securities and Exchange Commission, 

available at https://www.sec.gov/news/publicstatement/corp-fin-proxy-rules-2021-06-01. As the 

Commission noted in the 2021 Proposing Release, 

this staff statement did not alter PVABs’ obligation 

to comply with the Rule 14a–2(b)(9) conditions by 

Dec. 1, 2021. See 2021 Proposing Release at 67393, 

n.120; see also infra note 278. In light of today’s 

action, we hereby rescind the staff’s statement. 

19 2020 Adopting Release at 55107–08. 

20 Id. 

forth in new Rule 14a–2(b)(9) became 

effective on December 1, 2021.4

The 2020 Final Rules were intended 

to help ensure that investors who use 

proxy voting advice receive more 

transparent, accurate, and complete 

information on which to make their 

voting decisions.5 In the adopting 

release for the 2020 Final Rules (the 

‘‘2020 Adopting Release’’), the 

Commission recognized the ‘‘important 

and prominent role’’ that PVABs play in 

the proxy voting process 6 and adopted 

the 2020 Final Rules, in part, to address 

certain concerns that ‘‘registrants, 

investors, and others have expressed 

. . . about the role of [PVABs].’’ 7 At the 

same time, the Commission endeavored 

to tailor the 2020 Final Rules to avoid 

imposing undue costs or delays that 

could adversely affect the timely 

provision of independent proxy voting 

advice.8

After the Commission adopted the 

2020 Final Rules, however, institutional 

investors and other PVAB clients 

continued to express strong concerns 

about the rules’ impact on their ability 

to receive independent proxy voting 

advice in a timely manner. Furthermore, 

PVABs continued to develop industrywide best practices and improve their 

own business practices to address the 

concerns that were the impetus for the 

2020 Final Rules. The Commission 

subsequently determined that it was 

appropriate to reassess the 2020 Final 

Rules, solicit further public comment, 

and, where appropriate, recalibrate the 

rules to preserve the independence of 

proxy voting advice and ensure that 

PVABs can deliver advice in a timely 

manner without passing on higher costs 

to their clients. As such, in November 

2021, the Commission proposed the 

following changes to the rules governing 

proxy voting advice (the ‘‘2021 

Proposed Amendments’’): 

• Amend Rule 14a–2(b)(9) to remove 

the Rule 14a–2(b)(9)(ii) conditions and 

paragraphs (iii), (iv), (v), and (vi) of Rule 

14a–2(b)(9), which contain safe harbors 

and exclusions from the Rule 14a– 

2(b)(9)(ii) conditions; and 

• Amend Rule 14a–9 to remove Note 

(e) to that rule.9

The 2021 Proposed Amendments 

would not affect other aspects of the 

2020 Final Rules, which would remain 

in place and effective as to PVABs and 

their advice.10 As such, under the 2021 

Proposed Amendments, proxy voting 

advice would remain a solicitation 

subject to the proxy rules.11

Additionally, in order to rely on the 

exemptions from the proxy rules’ 

information and filing requirements set 

forth in Rules 14a–2(b)(1) and (3), 

PVABs would continue to be subject to 

Rule 14a–2(b)(9)’s conflicts of interest 

disclosure requirement.12 Finally, 

although the 2021 Proposed 

Amendments would remove Note (e) to 

Rule 14a–9, material misstatements of 

fact in, and omissions of material fact 

from, proxy voting advice would remain 

subject to liability under that rule.13 The 

proposing release for the 2021 Proposed 

Amendments (the ‘‘2021 Proposing 

Release’’) also requested comment as to 

whether the Commission should rescind 

or revise the supplemental guidance 

that it issued to investment advisers in 

2020 about their proxy voting 

obligations (the ‘‘Supplemental Proxy 

Voting Guidance’’) 14 because it was 

prompted, in part, by the adoption of 

the Rule 14a–2(b)(9)(ii) conditions.15

Finally, the 2021 Proposing Release 

provided a discussion of the application 

of Rule 14a–9 to proxy voting advice, 

specifically with respect to a PVAB’s 

statements of opinion.16

We received a number of comments in 

response to the 2021 Proposed 

Amendments.17 After considering the 

public comments, we are adopting the 

2021 Proposed Amendments, as 

proposed, for the reasons set forth 

below. Consistent with the proposal, we 

are amending Rules 14a–2 and 14a–9 to 

rescind the Rule 14a–2(b)(9)(ii) 

conditions (as well as the related safe 

harbors and exclusions set forth in 

Rules 14a–2(b)(9)(iii) through (vi)) and 

delete Note (e) to Rule 14a–9. In 

addition, we are rescinding the 

Supplemental Proxy Voting Guidance. 

Finally, in Section II.B.3 below, we 

reiterate our discussion regarding the 

application of Rule 14a–9 to proxy 

voting advice, specifically with respect 

to a PVAB’s statements of opinion.18

These final amendments reflect the 

fact that our thinking has evolved with 

respect to the Rule 14a–2(b)(9)(ii) 

conditions and Note (e) to Rule 14a–9, 

informed, in part, by the concerns 

expressed by PVABs’ clients and other 

investors that were among the primary 

intended beneficiaries of the 2020 Final 

Rules. The Rule 14a–2(b)(9)(ii) 

conditions and Note (e) reflected an 

effort to balance competing policy 

concerns. As initially proposed, Rule 

14a–2(b)(9) would have required that 

PVABs allow registrants multiple 

opportunities to review proxy voting 

advice and provide feedback on such 

advice in advance of its distribution to 

PVABs’ clients. In declining to adopt 

those proposed advance review and 

feedback provisions in the 2020 Final 

Rules, the Commission recognized the 

significant concerns raised by investors 

and other commenters that the proposed 

rules would have adverse effects on the 

cost, timeliness, and independence of 

proxy voting advice.19 The Commission 

responded to those concerns by instead 

adopting the modified, more principlesbased conditions in Rule 14a–2(b)(9)(ii) 

and the related safe harbors.20

The Commission reasonably 

determined at the time it adopted the 

2020 Final Rules that the revised Rule 

14a–2(b)(9)(ii) conditions struck an 

appropriate balance between the risks 


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21See infra Section II.B.3. 

22We discuss these misperceptions in more detail 

in Section II.B.3 below. See infra notes 221–222 and 

accompanying text. 

23 17 CFR 240.14a–2(b)(9). 

24PVABs have typically relied upon the 

exemptions in Rules 14a–2(b)(1) and (b)(3) to 

provide advice without complying with the proxy 

rules’ information and filing requirements. 

Amendments to Exemptions from the Proxy Rules 

for Proxy Voting Advice, Release No. 34–87457 

(Nov. 5, 2019) [84 FR 66518, 66525 & n.68 (Dec. 4, 

2019)] (‘‘2019 Proposing Release’’). 

25 17 CFR 240.14a–2(b)(9)(i). 

26 17 CFR 240.14a–2(b)(9)(ii). The Commission 

adopted the Rule 14a–2(b)(9)(ii) conditions, in part, 

in response to the concerns expressed by 

commenters about the ‘‘advance review and 

feedback’’ conditions that were included in the 

Commission’s 2019 proposed rules (the ‘‘2019 

Proposed Rules’’). Under the advance review and 

feedback conditions in the 2019 Proposed Rules, a 

PVAB would have been required to, as a condition 

to relying on the exemptions in Rules 14a–2(b)(1) 

and (3), provide registrants and certain other 

soliciting persons covered by its proxy voting 

advice a limited amount of time to review and 

provide feedback on the advice before it is 

disseminated to the PVAB’s clients, with the length 

of time provided depending on how far in advance 

of the shareholder meeting the registrant or other 

soliciting person has filed its definitive proxy 

statement. See 2019 Proposing Release at 66530–35. 

These conditions were among the most contentious 

features of the 2019 Proposed Rules and drew a 

significant number of opposing public comments. 

2020 Adopting Release at 55103–07. In response to 

these comments, the Commission reconsidered its 

approach and, in the 2020 Final Rules, adopted the 

Rule 14a–2(b)(9)(ii) conditions in place of the 

advance review and feedback conditions. Id. at 

55107–08. 

27 17 CFR 240.14a–2(b)(9)(iii) and (iv). 

28 17 CFR 240.14a–2(b)(9)(v) and (vi). 

29 Id. 

30 2020 Adopting Release at 55109. 

raised by commenters and the 

Commission’s interest in facilitating 

more informed proxy voting decisions. 

We have revisited our analysis of those 

issues, however, and are now striking a 

different and improved policy balance. 

We believe this new policy balance 

better alleviates the costs and risks to 

PVABs, as compared to the 2020 Final 

Rules, and better addresses PVAB 

clients’ and other investors’ concerns 

about receiving timely and independent 

advice from PVABs. In particular, we 

are no longer persuaded that the 

potential benefits of those conditions 

sufficiently justify the risks they pose to 

the cost, timeliness, and independence 

of proxy voting advice and believe that 

the final amendments strike a better 

policy balance. Several factors support 

the reasonableness of our analysis. For 

example, it is supported by the 

continued, strong opposition to the Rule 

14a–2(b)(9)(ii) conditions from many 

institutional investors and other PVAB 

clients, as well as many of the 

commenters on the 2021 Proposed 

Amendments, who have continued to 

raise concerns that the 2020 Final Rules 

would have adverse effects on the cost, 

timeliness, and independence of proxy 

voting advice. Our analysis is also 

supported by certain voluntary practices 

of PVABs. We believe those practices 

are likely, at least to some extent, to 

advance the goals underlying the Rule 

14a–2(b)(9)(ii) conditions, thereby 

providing institutional investors and 

other PVAB clients with some of the 

benefits that those conditions were 

expected to produce while avoiding the 

potentially significant associated costs. 

The Commission also determined at 

the time it adopted the 2020 Final Rules 

that the addition of Note (e) to Rule 

14a–9 would clarify the application of 

the rule to proxy voting advice while 

balancing concerns regarding 

heightened legal uncertainty and 

litigation risk for PVABs. We now 

conclude, however, that rather than 

reducing legal uncertainty and 

confusion, the addition of Note (e) has 

unnecessarily exacerbated it by creating 

a risk of confusion regarding the 

application of Rule 14a–9 to proxy 

voting advice.21

We emphasize that the final 

amendments do not represent a 

wholesale reversal of the 2020 Final 

Rules. Proxy voting advice generally 

remains a solicitation subject to the 

proxy rules, including liability under 

Rule 14a–9 for material misstatements 

or omissions of fact. Further, in order to 

rely on the exemptions from the proxy 

rules’ information and filing 

requirements set forth in Rules 14a– 

2(b)(1) and (3), PVABs will still have to 

satisfy Rule 14a–2(b)(9)’s conflicts of 

interest disclosure requirements. As we 

explain in greater detail in Section II.B.3 

below, our deletion of Note (e) does not 

affect the scope of Rule 14a–9 or its 

application to proxy voting advice. As 

with any other person engaged in a 

solicitation as defined in Rule 14a–1(l), 

a PVAB may be liable under Rule 14a– 

9 for a material misstatement of fact, or 

an omission of material fact, including, 

depending on the facts and 

circumstances, with regard to its 

methodology, sources of information, or 

conflicts of interest. 

The intent of the final amendments is 

to avoid burdens on PVABs that may 

impede and impair the timeliness and 

independence of their proxy voting 

advice and avoid misperceptions 22

regarding the application of Rule 14a–9 

liability to proxy voting advice, while 

also preserving investors’ confidence in 

the integrity of such advice. We believe 

that the final amendments, in 

combination with the unaffected 

portions of the 2020 Final Rules, strike 

a more appropriate balance than the 

2020 Final Rules, as originally adopted, 

because they will address PVAB clients’ 

and other investors’ concerns about 

potential impediments to the timely 

provision of independent proxy voting 

advice. 

II. Discussion of Final Amendments 

A. Amendments to Rule 14a–2(b)(9) 

The 2020 Final Rules amended Rule 

14a–2(b) by adding paragraph (9),23

which sets forth conditions that a PVAB 

must satisfy in order to rely on the 

exemptions in Rules 14a–2(b)(1) and 

(b)(3) from the proxy rules’ information 

and filing requirements.24 Rule 14a– 

2(b)(9)(i) requires PVABs to provide 

their clients with certain conflicts of 

interest disclosures in connection with 

their proxy voting advice.25 The Rule 

14a–2(b)(9)(ii) conditions require that 

PVABs adopt and publicly disclose 

written policies and procedures 

reasonably designed to ensure that (A) 

registrants that are the subject of their 

proxy voting advice have such advice 

made available to them at or prior to the 

time when such advice is disseminated 

to the PVABs’ clients and (B) the PVABs 

provide their clients with a mechanism 

by which they can reasonably be 

expected to become aware of any 

written statements regarding their proxy 

voting advice by registrants who are the 

subject of such advice, in a timely 

manner before the relevant shareholder 

meeting (or, if no meeting, before the 

votes, consents or authorizations may be 

used to effect the proposed action).26

In addition to those conditions, Rule 

14a–2(b)(9) also sets forth two nonexclusive safe harbor provisions in 

paragraphs (iii) and (iv) that, if met, are 

intended to give assurance to PVABs 

that they have satisfied the conditions of 

Rules 14a–2(b)(9)(ii)(A) and (B), 

respectively.27 Further, Rules 14a– 

2(b)(9)(v) and (vi) contain exclusions 

from the Rule 14a–2(b)(9)(ii) 

conditions.28 Those rules provide that 

PVABs need not comply with Rule 14a– 

2(b)(9)(ii) to the extent that their proxy 

voting advice is based on a client’s 

custom voting policy or if they provide 

proxy voting advice as to non-exempt 

solicitations regarding certain mergers 

and acquisitions or contested matters.29

The Commission adopted Rule 14a– 

2(b)(9)(ii)(A) to help ensure that 

registrants are timely informed of proxy 

voting advice that bears on the 

solicitation of their shareholders.30 The 

Commission stated in the 2020 

Adopting Release that the rule was 

intended as a means to ‘‘further the goal 

of ensuring that [PVABs’] clients have 

more complete, accurate, and 

transparent information to consider 


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31 Id. 

32 Id. at 55112–13. 

33 Id. 

34 Id. at 55113. 

35 2021 Proposing Release at 67385–86. 

36 Id. at 67387. 

37 Id. 

38 Id. at 67387, n.55. 

39 Id. 

40See letters from Fran Seegull, President, U.S. 

Impact Investing Alliance (Dec. 17, 2021) 

(‘‘Alliance’’); Anonymous (Nov. 20, 2021) 

(‘‘Anonymous 1’’); Ben J., Administrative Services 

Manager (Dec. 7, 2021) (‘‘Ben J.’’); Stephen Hall, 

Legal Director and Securities Specialist, and Jason 

Grimes Senior Counsel, Better Markets, Inc. (Dec. 

27, 2021) (‘‘Better Markets’’); Marcie Frost, Chief 

Executive Officer, California Public Employees’ 

Retirement System (Dec. 27, 2021) (‘‘CalPERS’’); Jeff 

Mahoney, General Counsel, Council of Institutional 

Investors (Dec. 24, 2021) (‘‘CII’’); Ron Baker, 

Executive Director, Colorado Public Employees’ 

Retirement Association (Dec. 27, 2021) (‘‘CO 

Retirement’’); Dan Jamieson (Dec. 7, 2021) (‘‘D. 

Jamieson’’); Nichol Garzon-Mitchell, Senior Vice 

President, General Counsel, Glass Lewis (Dec. 27, 

2021) (‘‘Glass Lewis’’); Gail C. Bernstein, General 

Counsel, Investment Adviser Association (Dec. 27, 

2021) (‘‘IAA’’); Kerrie Waring, Chief Executive 

Officer, ICGN (Dec. 22, 2021) (‘‘ICGN’’); Matt 

Thornton, Associate General Counsel, and Susan 

Olson General Counsel, Investment Company 

Institute (Dec. 23, 2021) (‘‘ICI’’); Gary Retelny 

President and CEO, Institutional Shareholder 

Services Inc. (Dec. 22, 2021) (‘‘ISS’’); Justin Giorgio, 

Doctorate of Computer Science (Nov. 20, 2021) (‘‘J. 

Giorgio’’); Jennifer Han Executive Vice President, 

Chief Counsel and Head of Regulatory Affairs, 

Managed Funds Association (Dec. 20, 2021) 

(‘‘MFA’’); Melanie Senter Lubin, NASAA President, 

Maryland Securities Commissioner (Dec. 27, 2021) 

(‘‘NASAA’’); Thomas P. DiNapoli, State 

Comptroller, New York State Common Retirement 

Fund (Dec. 27, 2021) (‘‘New York Comptroller’’); 

Patti Gazda, Corporate Governance Officer, Ohio 

Public Employees Retirement System (Dec. 23, 

2021) (‘‘Ohio Public Retirement’’); Richard A. Kirby 

and Beth-ann Roth, RK Invest Law, PBC ESG Legal 

Services, Inc. (Dec. 27, 2021) (‘‘RK Invest Law and 

ESG Legal Services’’); Donna F. Anderson, Vice 

President, Head of Corporate Governance, and Bob 

Grohowski, Managing Legal Counsel, Head of 

Legislative and Regulatory Affairs, T. Rowe Price 

(Dec. 21, 2021) (‘‘TRP’’); Lisa Woll, CEO, US SIF: 

The Forum for Sustainable and Responsible 

Investment (Dec. 23, 2021) (‘‘US SIF’’); Theresa 

Whitmarsh, Chief Executive Officer, Washington 

State Investment Board (Dec. 22, 2021) 

(‘‘Washington State Investment’’). 

41See, e.g., letters from CalPERS; CO Retirement; 

New York Comptroller; Ohio Public Retirement; 

TRP; Washington State Investment. 

42See, e.g., letters from CII; ICGN; ICI; IAA; MFA. 

43See letters from Alliance; CO Retirement; Glass 

Lewis; IAA; ICGN; ISS; NASAA; New York 

Comptroller; Ohio Public Retirement; US SIF; 

Washington State Investment. 

44See letters from CO Retirement; Glass Lewis; 

IAA; ICI; ISS; MFA; NASAA; New York 

Comptroller; US SIF. 

45See id. 

46See letter from Alliance. 

47See letter from MFA. 

48See letters from CalPERS; ICI; TRP; US SIF. 

49See letter from Glass Lewis. 

50See letters from Glass Lewis; NASAA. 

51See letter from NASAA. 

when making their voting decisions’’ by 

facilitating opportunities for registrants 

to review and respond to proxy voting 

advice.31 Similarly, the Commission 

adopted Rule 14a–2(b)(9)(ii)(B) as a 

means of providing PVABs’ clients with 

additional information that would assist 

them in assessing and contextualizing 

proxy voting advice.32 The Commission 

intended that this condition would 

supplement existing mechanisms— 

including registrants’ ability to file 

supplemental proxy materials to 

respond to proxy voting advice that they 

may know about and to alert investors 

to any disagreements with such 

advice—so as to permit PVABs’ clients, 

including investment advisers voting 

shares on behalf of their own clients, to 

consider registrants’ views along with 

the proxy voting advice and before 

making their voting determinations.33

This condition reflected the 

Commission’s views that PVABs’ clients 

would benefit from more information 

when considering how to vote their 

proxies and that shareholders should 

have ready access to information to 

make informed voting decisions.34

1. Proposed Amendments 

In the 2021 Proposing Release, the 

Commission proposed to amend Rule 

14a–2(b)(9) by rescinding the Rule 14a– 

2(b)(9)(ii) conditions. The Commission 

noted that investors and others 

continued to express significant 

concerns that the Rule 14a–2(b)(9)(ii) 

conditions would increase PVABs’ 

compliance costs and impair the 

independence and timeliness of their 

proxy voting advice and that such 

effects are not justified by 

corresponding investor protection 

benefits.35 Further, the Commission 

described PVABs’ efforts to develop 

industry-wide best practices, in addition 

to certain of their existing business 

practices, and noted that those practices 

could address the concerns underlying 

the Rule 14a–2(b)(9)(ii) conditions. The 

Commission also observed that, 

although these practices differ from the 

Rule 14a–2(b)(9)(ii) conditions, they 

could provide PVABs’ clients and 

registrants with some of the 

opportunities and access to information 

that would have been required pursuant 

to the Rule 14a–2(b)(9)(ii) conditions.36

The Commission also proposed to 

delete paragraphs (iii), (iv), (v), and (vi) 

of Rule 14a–2(b)(9), which contain safe 

harbors and exclusions from the Rule 

14a–2(b)(9)(ii) conditions.37 Because the 

other paragraphs of Rule 14a–2(b)(9) 

would all be deleted, the Commission 

proposed to redesignate the conflicts of 

interest disclosure condition set forth in 

Rule 14a–2(b)(9)(i) as Rule 14a– 

2(b)(9).38 The Commission stated that 

the substance of that condition would 

otherwise remain unchanged.39

2. Comments Received 

Commenters expressed a range of 

views on the proposed amendments to 

Rule 14a–2(b)(9). A number of 

commenters supported rescinding the 

Rule 14a–2(b)(9)(ii) conditions and 

deleting paragraphs (iii) through (vi) of 

Rule 14a–2(b)(9).40 Those supporting 

commenters included some institutional 

investors 41 and some organizations that 

represent institutional investors and 

investment advisers,42 among others. 

Several commenters reiterated the 

concerns regarding the 2020 Final Rules 

that prompted the Commission to issue 

the 2021 Proposed Amendments, 

including expressing concern that the 

Rule 14a–2(b)(9)(ii) conditions would 

impair the independence of proxy 

voting advice,43 impede the timeliness 

of proxy voting advice,44 and increase 

PVABs’ compliance costs.45 For 

example, one commenter asserted that 

the Rule 14a–2(b)(9)(ii) conditions 

‘‘threaten[ ] the independence of the 

proxy advisory process by requiring that 

their voting advice be made available to 

corporate management at or prior to the 

time the advice is sent to their 

clients.’’ 46 Another commenter stated 

that those conditions ‘‘disrupt[ ] the 

preparation and delivery of proxy voting 

advice to fund managers and increases 

compliance costs,’’ noting that PVABs 

‘‘may engage with hundreds of issuers 

regarding thousands of shareholder 

proposals during a critical shareholder 

season’’ and that ‘‘additional 

compliance burdens not only muddle 

the timely delivery of materials to fund 

managers making it difficult to use the 

advice in advance of a shareholder 

meeting, but also increase compliance 

costs which get passed on to clients.’’ 47

Other commenters questioned the 

necessity of the Rule 14a–2(b)(9)(ii) 

conditions, asserting that they would 

not improve the accuracy of PVABs’ 

advice.48 One commenter that is a PVAB 

stated that PVABs already are 

incentivized to engage with registrants 

regarding their proxy voting advice in 

order to provide potentially useful 

information to their clients.49 Some 

commenters asserted that registrants 

have ways to express their views on 

proxy voting advice other than via the 

Rule 14a–2(b)(9)(ii) conditions, such as 

by publicly filing additional soliciting 

materials,50 with one of those 

commenters stating the types of 

investors that utilize proxy voting 

advice are sophisticated enough to 

know where to find registrants’ 

responses to such advice.51 Further, 


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52See letters from CII; Glass Lewis; IAA; ICI; ISS; 

Ohio Public Retirement. 53See letters from CII; ICI; Ohio Public 

Retirement. 54See letters from CII; Ohio Public Retirement. 55See letters from Better Markets; Glass Lewis; 

US SIF. 56See letters from Better Markets; CalPERS; ICI; 

Ohio Public Retirement; US SIF; Washington State 

Investment. 

57See letter from ICI. 

58See letter from Ohio Public Retirement. This 

commenter also noted that much of the registrant 

feedback that it had observed ‘‘involve[d] 

differences of opinion regarding the methodologies 

used by our proxy advisory firm, which is less 

useful in helping us to formulate our proxy votes.’’ 

Id. 

59See letters from Alliance; NASAA. 

60See letter from NASAA. 

61See letter from Alliance. 

62See letter from CII. 

63See letters from CII; ISS; RK Invest Law and 

ESG Legal Services. 

64See letters from D. Jamieson; Glass Lewis; ISS; 

RK Invest Law and ESG Legal Services. 

65See letters from John Endean, President, 

American Business Conference (Dec. 23, 2021) 

(‘‘ABC’’); Kyle Isakower, SVP of Regulatory and 

Energy Policy, American Council for Capital 

Formation (Dec. 22, 2021) (‘‘ACCF’’); Anonymous 

(Dec. 16, 2021) (‘‘Anonymous 2’’); Anne Smith 

(Dec. 27, 2021) (‘‘A. Smith’’); Lynnette Fallon, 

Executive Vice President HR/Legal, General 

Counsel and Secretary, Axcelis Technologies, Inc. 

(Dec. 20, 2021) (‘‘Axcelis’’); Michele Nellenbach, 

Vice President of Strategic Initiatives, Bipartisan 

Policy Center (Jan. 4, 2022) (‘‘BPC’’); Carlo Passeri, 

Senior Director of Capital Markets and Financial 

Services Policy, Biotechnology Innovation 

Organization (Dec. 23, 2021) (‘‘BIO’’); Maria Ghazal, 

Senior Vice President and Counsel, Business 

Roundtable (Dec. 23, 2021) (‘‘BRT’’); Benjamin 

Zycher, Senior Fellow, American Enterprise 

Institute (Dec. 23, 2021) (‘‘B. Zycher’’); Coalition of 

Business Trades (Dec. 23, 2021) (‘‘CBT’’); Tom 

Quaadman, Executive Vice President, Center for 

Capital Markets Competitiveness, U.S. Chamber of 

Commerce (Nov. 30, 2021) (‘‘CCMC I’’); Tom 

Quaadman, Executive Vice President, Center for 

Capital Markets Competitiveness, U.S. Chamber of 

Commerce (Dec. 23, 2021) (‘‘CCMC II’’); Ani Huang, 

President and CEO, Center On Executive 

Compensation (Dec. 27, 2021) (‘‘CEC’’); Eric Mills 

(Dec. 27, 2021) (‘‘E. Mills’’); Mark R. Allen, 

Executive Vice President, General Counsel and 

Secretary, Member of the Executive Committee, 

FedEx Corporation (Dec. 23, 2021) (‘‘FedEx’’); 

Frederick A. Brightbill, CEO and Chairman of the 

Board, MasterCraft Boat Holdings, Inc. (Dec. 17, 

2021) (‘‘MasterCraft’’); Chris Netram, Vice 

President, Tax and Domestic Economic Policy, 

National Association of Manufacturers (Dec. 24, 

2021) (‘‘NAM’’); John A. Zecca, Executive Vice 

President, Chief Legal and Regulatory Officer, 

Nasdaq, Inc. (Dec. 27, 2021) (‘‘Nasdaq’’); Stephen C. 

Taylor and John W. Chisholm, Chairman, President, 

CEO, and Lead Independent Director, Natural Gas 

Services Group, Inc. (Dec. 27, 2021) (‘‘Natural Gas 

Services’’); Gary A. LaBranche, FASAE, CAE, 

President and CEO, National Investor Relations 

Institute (Dec. 27, 2021) (‘‘NIRI’’); Wayne 

Winegarden, Ph.D., Sr. Fellow, Business and 

Economics Pacific Research Institute (Dec. 22, 2021) 

(‘‘Pacific Research’’); J.W. Verret, George Mason 

University Antonin Scalia Law School (Dec. 21, 

2021) (‘‘Prof. Verret’’); Paul Rose and Christopher J. 

Walker, Professors of Law, The Ohio State 

University (Dec. 22, 2021) (‘‘Profs. Rose and 

Walker’’); Bryan Steil and Bill Huizenga, Members 

of Congress (Feb. 2, 2022) (‘‘Reps. Steil and 

Huizenga’’); Ted Allen, Vice President, Policy and 

Advocacy, Society for Corporate Governance (Dec. 

30, 2021) (‘‘SCG’’); Tim Doyle, Founder and 

Principle, Doyle Strategies, LLC (Dec. 27, 2021) (‘‘T. 

Doyle’’); Douglas A. Cifu, Chief Executive Officer, 

Virtu Financial, Inc. (Dec. 20, 2021) (‘‘Virtu’’). 

66See letters from ABC; ACCF; BIO; BRT; B. 

Zycher; CBT; CCMC II; CEC; E. Mills; NAM; Natural 

Gas Services; NIRI; Pacific Research; Prof. Verret; 

Reps. Steil and Huizenga; SCG; T. Doyle; Virtu. 

67See letters from CCMC II; Profs. Rose and 

Walker. 

68See letters from NAM; Nasdaq; Natural Gas 

Services; Prof. Verret. 

several commenters asserted that 

PVABs’ existing practices already 

address the concerns underlying the 

Rule 14a–2(b)(9)(ii) conditions 52 and 

indicated that they expect PVABs to 

continue to maintain those practices 

even if the Rule 14a–2(b)(9)(ii) 

conditions are rescinded.53

Other commenters questioned, as an 

initial matter, whether the adoption of 

the Rule 14a–2(b)(9)(ii) conditions was 

warranted. For example, some 

commenters noted that although the 

Rule 14a–2(b)(9)(ii) conditions were 

intended to benefit investors, most 

investors did not request or support the 

adoption of those conditions.54 Other 

commenters asserted that the 2020 

Adopting Release failed to identify or 

provide credible evidence of a market 

failure.55 Some commenters also 

highlighted the low prevalence of errors 

in proxy voting advice historically, 

including by reference to data the 

Commission included in the 2019 

Proposing Release that indicated an 

approximately 0.3% error rate in proxy 

voting advice.56 One commenter 

expressed skepticism that the Rule 14a– 

2(b)(9)(ii) conditions would 

significantly improve the accuracy of 

proxy voting advice.57 Another 

commenter observed that it has not 

experienced a significant increase in 

registrant outreach regarding disputes 

over proxy voting advice since the 

adoption of the 2020 Final Rules, 

including through the Report Feedback 

Service that Glass Lewis implemented 

and made available to registrants before 

the Commission adopted the 2020 Final 

Rules and continues to make 

available.58 Other commenters 

expressed concern that the Rule 14a– 

2(b)(9)(ii) conditions inappropriately 

privilege the views of registrants’ 

management.59 For example, one of 

these commenters noted that the Rule 

14a–2(b)(9)(ii) conditions ‘‘tilt the 

playing field in favor of company 

management and create unequal access 

to the proxy solicitation process’’ 

because those conditions ‘‘do[ ] not 

require a PVAB to afford these 

opportunities to any other 

stakeholders,’’ including shareholder 

proponents.60

In addition to expressing concerns 

regarding the Rule 14a–2(b)(9)(ii) 

conditions, some commenters 

highlighted the potential benefits of 

rescinding those conditions as 

proposed. For example, one commenter 

stated that the 2021 Proposed 

Amendments would better ensure that 

investors have access to clear, timely, 

and impartial proxy voting advice and 

that the 2021 Proposed Amendments are 

appropriately tailored and responsive to 

investor concerns.61 Another 

commenter asserted that rescinding the 

Rule 14a–2(b)(9)(ii) conditions would 

give PVABs and investors flexibility to 

select mechanisms that best serve their 

needs and market conditions.62

Finally, some of the commenters that 

supported the 2021 Proposed 

Amendments expressed concerns 

regarding the legal basis or 

constitutionality of the Rule 14a– 

2(b)(9)(ii) conditions. Several 

commenters maintained that the Rule 

14a–2(b)(9)(ii) conditions exceed the 

Commission’s authority under Section 

14(a) of the Exchange Act because proxy 

voting advice does not constitute a 

‘‘solicitation.’’ 63 Other commenters 

asserted that the Rule 14a–2(b)(9)(ii) 

conditions could violate the First 

Amendment.64

A number of commenters opposed 

rescinding the Rule 14a–2(b)(9)(ii) 

conditions and deleting paragraphs (iii) 

through (vi) of Rule 14a–2(b)(9).65

Several of those commenters expressed 

concern regarding the process by which 

the 2021 Proposed Amendments were 

formulated, including by comparison to 

the process by which the 2020 Final 

Rules were adopted. Those processbased concerns generally were based on 

commenters’ assertions that the 2021 

Proposed Amendments were not 

justified by sufficient evidence, data, or 

changes in the market for proxy voting 

advice and that the Commission lacked 

a reasonable basis for the 2021 Proposed 

Amendments because the Commission 

proposed those amendments before the 

2020 Final Rules took effect.66

Similarly, some commenters 

submitted a report that analyzed and 

highlighted the benefits of the 2020 

Final Rules as support for the 

proposition that those rules were 

adopted pursuant to a careful, 

methodical process and should not be 

amended at this time.67 Other 

commenters expressed concern that 

registrants and investors may have 

changed their practices in reliance on 

the Commission’s adoption of the 2020 

Final Rules,68 with one of these 

commenters indicating that it and other 

registrants have been preparing for the 


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69See letter from Natural Gas Services. 

70See letter from CCMC II. 

71See letters from ABC; American Securities 

Association (Dec. 3, 2021); BIO; CCMC I; CCMC II; 

CEC; IAA; NIRI; Prof. Verret; SCG; Reps. Steil and 

Huizenga; Patrick McHenry, Ranking Member, 

House Committee on Financial Services, and Pat 

Toomey, Ranking Member, Senate Committee on 

Banking, Housing, and Urban Affairs (Jan. 10, 2022) 

(‘‘Rep. McHenry and Sen. Toomey’’); T. Doyle. We 

believe that the 30-day comment period for the 

2021 Proposed Amendments provided adequate 

opportunity for interested parties to share their 

views, especially given the targeted nature of such 

amendments. We have reviewed and considered the 

numerous comment letters received in response to 

the proposal, including the five comment letters 

submitted after the comment period deadline. See 

letters from BPC; Reps. Steil and Huizenga; SCG; 

Rep. McHenry and Sen. Toomey; S. Milloy. 

72See letters from BPC; CEC; E. Mills; 

MasterCraft; NAM; Nasdaq; Natural Gas Services; 

Pacific Research. 

73See letter from NAM. 

74See letter from Profs. Rose and Walker. 

75See letter from B. Zycher. 

76See letters from Axcelis; CEC; Natural Gas 

Services; T. Doyle. 

77See letter from Axcelis. 

78See letter from Nasdaq. This commenter cited 

a 2020 proxy season survey indicating that 

registrants would utilize the Rule 14a–2(b)(9)(ii) 

conditions (the ‘‘CCMC and Nasdaq survey’’) and a 

survey conducted in Nov. 2019 indicating that retail 

investors were in favor of providing registrants with 

an opportunity to review and provide feedback on 

proxy voting advice (the ‘‘Spectrem Group survey’’). 

Id. 

79See letter from BPC. 

80See letters from ACCF; CCMC II; CEC; Natural 

Gas Services; NIRI; Profs. Rose and Walker. 

81See American Council for Capital Formation, 

Proxy Advisors Are Still a Problem: 2021 Proxy 

Season Analysis Shows Companies Continue To 

Report Similar Rate of Errors Despite Heightened 

Scrutiny 9–10 (Dec. 2021) (‘‘ACCF Study’’), 

available at https://accf.ftlbcdn.net/wp-content/ 

uploads/2021/12/ACCF_proxy_advisor_rule_

report_2021-FINAL.pdf. 

82 Id. at 11–12. 

83See letter from T. Doyle. Mr. Doyle’s comment 

letter on the 2019 Proposed Rules also cited this 

same Dec. 2019 survey. See letter in response to the 

2019 Proposing Release of T. Doyle (Feb. 3, 2020), 

available at https://www.sec.gov/comments/s7-22- 

19/s72219-6742431-207767.pdf. 

84See letters from Nasdaq; Natural Gas Services. 

85See letter from SCG. SCG’s membership is 

comprised ‘‘of more than 3,400 corporate and 

assistant secretaries, in-house counsel, outside 

counsel, and other governance professionals who 

serve approximately 1,600 entities, including 1,000 

public companies of almost every size and 

industry.’’ Id. SCG’s comment letter on the 2019 

Proposed Rules also cited this same Dec. 2019 

survey. See letter in response to the 2019 Proposing 

Release of SCG (Feb. 3, 2020), available at https:// 

www.sec.gov/comments/s7-22-19/s72219-6743687- 

207853.pdf. The Dec. 2019 survey of 134 members 

found that 42% of respondents answered 

affirmatively when asked whether they were ‘‘aware 

of any factual errors, omissions of material facts, or 

errors in analysis in the last three years.’’ Id. 

86See letters from ACCF; Natural Gas Services; T. 

Doyle. 

87See letters from ABC; BIO; BRT; NAM; T. 

Doyle. 

88See letter from Axcelis. 

89See id. 

90See letters from BIO; B. Zycher. 

effectiveness of the 2020 Final Rules.69

One commenter asserted that the 2021 

Proposing Release did not take into 

account the factors that Congress 

intended the Commission to consider 

with respect to Section 14(a) of the 

Exchange Act.70 Finally, several 

commenters raised concerns regarding 

the 30-day comment period specified in 

the 2021 Proposing Release, including 

concerns that such comment period did 

not provide the public sufficient time to 

consider and comment on the 2021 

Proposed Amendments.71

In addition to expressing concern 

about the process by which the 2021 

Proposed Amendments were 

formulated, some commenters asserted 

that rescinding the Rule 14a–2(b)(9)(ii) 

conditions would have a negative 

impact on proxy voting advice. For 

example, some commenters stated that 

rescinding the Rule 14a–2(b)(9)(ii) 

conditions would decrease the 

transparency and accuracy of proxy 

voting advice and confidence in the 

proxy process generally.72 Relatedly, 

another commenter asserted that the 

Rule 14a–2(b)(9)(ii) conditions would 

improve the accuracy and reliability of 

proxy voting advice.73 Other 

commenters expressed concern that 

rescinding the Rule 14a–2(b)(9)(ii) 

conditions would jeopardize the 

Commission’s stated goals for the 2020 

Final Rules 74 and would decrease the 

amount of information available to 

investors.75

Further, some commenters asserted 

that without the Rule 14a–2(b)(9)(ii) 

conditions, registrants will struggle to 

address PVABs’ advice in a timely 

manner before a shareholder meeting.76

One of these commenters asserted that 

if registrants do not have an opportunity 

to timely address the logic behind a 

voting recommendation, PVABs can 

‘‘essentially unilaterally control[ ] the 

outcome of’’ shareholder votes.77 Some 

commenters also cited support from 

registrants, investors, and others for the 

Rule 14a–2(b)(9)(ii) conditions, 

including certain surveys,78 and the 

historically bipartisan support for 

reforming the proxy process.79

Some commenters maintained that 

the Commission should retain the Rule 

14a–2(b)(9)(ii) conditions due to 

continued concerns regarding errors in 

proxy voting advice. For example, some 

commenters asserted that a 2021 study 

(the ‘‘ACCF study’’) demonstrates the 

continued prevalence of errors in, and 

disagreements by registrants with, proxy 

voting advice.80 According to the ACCF 

study, there were 50 instances in 2021 

in which registrants filed supplemental 

proxy materials to dispute the data or 

analysis in a PVAB’s proxy voting 

advice, an increase from 42 such 

instances in 2020.81 That study also 

asserted that the Rule 14a–2(b)(9)(ii) 

conditions provide a better process for 

registrants to access and respond to 

proxy voting advice than the current 

process in which registrants ‘‘who 

receive a proxy advisor 

recommendation where they believe 

there is an error or serious disagreement 

must submit a supplemental filing to 

their proxy statement and take on 

additional anti-fraud liability.’’ 82

Another commenter cited a December 

2019 survey of compensation and 

human resource professionals at 105 

public registrants (the ‘‘Willis Towers 

Watson survey’’) in which 59% of 

respondents ‘‘considered factual errors 

to be a big problem under the current 

system’’ of proxy voting advice.83 In 

addition, several commenters 

highlighted their own experience with, 

or anecdotal evidence of, inaccurate or 

misleading proxy voting advice and 

described the burdens associated with 

responding to and correcting such 

advice in a timely manner.84 Another 

commenter expressed the view that the 

prevalence of errors in and omissions 

from proxy voting advice has not 

changed since 2020, citing a December 

2019 survey of its members (the ‘‘SCG 

survey’’).85 Several other commenters 

asserted that the 2020 Final Rules 

would allow registrants to more 

efficiently and effectively communicate 

their perspective on errors in and 

disagreements with proxy voting 

advice.86

Other commenters disputed the 

concerns expressed regarding the Rule 

14a–2(b)(9)(ii) conditions that the 2021 

Proposing Release described. Some 

commenters asserted that the Rule 14a– 

2(b)(9)(ii) conditions would not 

disproportionately or negatively impact 

the independence, cost, or timeliness of 

proxy voting advice.87 One commenter 

stated that the Commission’s concern 

for the timeliness and cost of proxy 

voting advice is misplaced given that 

the 2020 Final Rules did not require 

advance review of proxy voting 

advice.88 This commenter also disputed 

the notion that the Rule 14a–2(b)(9)(ii) 

conditions would increase costs for 

PVABs.89 Other commenters asserted 

that PVABs’ compliance costs 

associated with the Rule 14a–2(b)(9)(ii) 

conditions did not support rescinding 

those conditions in light of the 

duopolistic nature of the proxy voting 

advice market.90 Finally, some 

commenters stated that, even if the Rule 

14a–2(b)(9)(ii) conditions increase the 

costs of proxy voting advice, such costs 


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91See letters from Axcelis; Natural Gas Services. 

92See letters from BIO; BRT; CEC; NAM; Nasdaq; 

NIRI; SCG; T. Doyle. 

93See letters from CCMC II; Prof. Verret. 

94See letter from CEC. 

95See letters from BIO; SCG. 

96See letter from CEC. 

97See letters from CCMC II; CEC; Nasdaq; SCG. 

98See letters from Nasdaq; SCG. 

99See letter from SCG. 

100See letter from BIO. 

101See id. 

102See letter from Prof. Verret (‘‘This new 

proposal would generate all the harm that may 

come from allowing the proxy advisors an 

exemption from the proxy solicitation rules with 

none of the mechanisms previously attached to the 

exemption to limit conflicts and to address 

problems with the reliability of proxy advisor 

recommendations.’’). 

103See letter from B. Zycher. 

104See letter from CCMC II. 

105See letter from Natural Gas Services. 

106See letters from ABC; BIO; NAM; NIRI; Virtu. 

107See letter from CCMC I. 108See letter from CEC. 109See letter from NIRI. 110See letter from SCG. 111See letter from Axcelis. 112See letter from CalPERS. 113 2020 Adopting Release at 55107. 114 Id. at 55107–08, 55111–12. 

are justified and preferred by investors 

if they ensure accurate advice and give 

registrants a chance to respond to such 

advice in a timely manner.91

Several commenters took issue with 

the Commission’s discussion in the 

2021 Proposing Release of PVABs’ 

existing practices. Some of those 

commenters asserted that PVABs’ 

current practices are insufficient 

substitutes for the Rule 14a–2(b)(9)(ii) 

conditions, which, in the view of these 

commenters, provide more 

comprehensive and consistent 

standards.92 Other commenters asserted 

that the Commission’s discussion of 

PVABs’ policies and procedures does 

not support rescission of the Rule 14a– 

2(b)(9)(ii) conditions.93 One commenter 

asserted that because ISS and Glass 

Lewis already provide registrants access 

to their advice at the same time that it 

is disseminated to their clients, 

compliance with the Rule 14a–2(b)(9)(ii) 

conditions should not be burdensome.94

Other commenters expressed concern 

that without the Rule 14a–2(b)(9)(ii) 

conditions, PVABs could change their 

practices to the detriment of their 

clients.95

Similarly, some commenters 

expressed specific concerns regarding 

ISS’ practices. One commenter asserted 

that ISS has increasingly resisted 

making changes to its proxy voting 

advice in response to registrant feedback 

and has been less inclined to engage 

with registrants regarding its advice.96

Other commenters stated that ISS has 

recently reduced communications and 

transparency below what it would have 

provided prior to the adoption of the 

2020 Final Rules by ending its practice 

of providing S&P 500 companies with 

the opportunity to review and provide 

feedback on draft proxy voting advice.97

Some of these commenters highlighted 

the fact that ISS still provides registrants 

in jurisdictions other than the U.S. with 

this opportunity.98 Finally, one 

commenter asserted that, because ISS no 

longer provides U.S. registrants with an 

opportunity to review draft proxy voting 

advice, more errors in proxy voting 

advice now go uncorrected.99

One commenter referenced broader, 

policy-based justifications for opposing 

the proposed amendments to Rule 14a– 

2(b)(9). For example, the commenter 

expressed concern that rescinding the 

Rule 14a–2(b)(9)(ii) conditions would 

exempt PVABs from the transparency 

standards that the Commission applies 

to other similarly-situated market 

participants, such as exchanges, 

registrants, and broker-dealers.100 This 

commenter also highlighted the 

duopolistic nature of the proxy voting 

advice market as a justification for 

additional regulation, rather than deregulation, of PVABs to ensure 

transparency.101

Finally, some commenters expressed 

concerns regarding potential 

consequences of rescinding the Rule 

14a–2(b)(9)(ii) conditions. One 

commenter expressed concern that, 

without these conditions, the 

Commission would allow PVABs to be 

exempt from the proxy rules’ 

information and filing requirements 

without sufficient alternative investor 

protection mechanisms to justify that 

exemption.102 Another commenter 

expressed concern that rescinding the 

Rule 14a–2(b)(9)(ii) conditions would 

reduce the transparency of proxy voting 

advice and allow PVABs to increase the 

relative weight of their political 

preferences, such as by introducing 

environmental, social, and governance 

(‘‘ESG’’) objectives.103 Similarly, one 

commenter cited a 2021 research paper 

that found that PVABs’ advice favors 

ESG proposals that may not necessarily 

be in the best economic interests of all 

investors.104 Another commenter 

asserted that although it appreciated the 

Commission’s retention of the conflicts 

of interest disclosure requirement in 

Rule 14a–2(b)(9)(i), that requirement is 

hollow without the Rule 14a–2(b)(9)(ii) 

conditions.105

In addition to expressing concerns 

regarding the 2021 Proposed 

Amendments, some commenters that 

opposed the proposed rescission of the 

Rule 14a–2(b)(9)(ii) conditions made 

alternative recommendations to the 

Commission. For example, some 

commenters recommended that the 

Commission commit to a retrospective 

review of the 2020 Final Rules rather 

than adopting the 2021 Proposed 

Amendments.106 One commenter 

recommended that the Commission 

rescind the 2021 Proposed Amendments 

and issue an Advanced Notice of 

Proposed Rulemaking that would permit 

all interested parties to provide input 

and inform the Commission’s 

deliberations on whether to reconsider 

the 2020 Final Rules.107 Another 

commenter suggested that the 

Commission could mitigate concerns 

about whether waiting for a registrant’s 

response to proxy voting advice could 

shorten the proxy voting period by 

providing guidance on how long a 

registrant has to provide a response or 

the applicability of the rules in sensitive 

cases (e.g., proxy contests, vote no 

campaigns, or special meetings).108 One 

commenter recommended that the 

Commission adopt an ‘‘advance review 

and feedback’’ requirement consistent 

with the 2019 Proposed Rules.109

Another commenter recommended that 

if the Commission does not believe that 

the 2020 Final Rules are appropriate, it 

should consider implementing an 

alternative regulatory framework.110 In 

addition, one commenter asserted that 

the Rule 14a–2(b)(9)(ii) conditions 

should be maintained but modified to 

require that PVABs provide their advice 

to registrants at no cost.111

Finally, one commenter, which 

generally supported the proposal, 

recommended that the Commission 

focus more on the accuracy of 

registrants’ disclosures, rather than 

PVABs, given the low incidence of 

errors in their proxy voting advice.112

3. Final Amendments 

We are adopting the amendments to 

Rule 14a–2(b)(9) as proposed. 

Specifically, we are amending Rule 14a– 

2(b)(9) to delete paragraphs (ii), (iii), 

(iv), (v), and (vi) and to redesignate Rule 

14a–2(b)(9)(i) as Rule 14a–2(b)(9). 

The Commission recognized when it 

adopted the 2020 Final Rules that 

‘‘introducing new rules into a complex 

system like proxy voting . . . could 

inadvertently disrupt the system and 

impose unnecessary costs if not 

carefully calibrated.’’ 113 The 

Commission acknowledged that many 

investors had expressed serious 

concerns that the proposed advance 

review and feedback conditions would 

adversely affect the cost, timeliness, and 

independence of proxy voting advice.114

The Commission nonetheless concluded 


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115 Id. 

116 Id. at 55107. 

117See supra notes 31–34 and accompanying text. 

118See supra notes 43–47 and accompanying text; 

2021 Proposing Release at 67385 & nn.23–24 (citing 

Peter Rasmussen, Divided SEC Passes Controversial 

Proxy Advisor Rule, Bloomberg Law (July 29, 2020), 

available at https://news.bloomberglaw.com/

bloomberg-law-analysis/analysis-divided-secpasses-controversial-proxy-advisor-rule (noting 

criticism of the 2020 Final Rules by Nell Minow, 

Vice Chair of ValueEdge Advisors, that the 2020 

Final Rules will make proxy voting advice ‘‘more 

expensive and less independent’’); Council of 

Institutional Investors, Leading Investor Group 

Dismayed by SEC Proxy Advice Rules (July 22, 

2020), available at https://www.cii.org/july22_sec_

proxy_advice_rules (‘‘[T]he new rules . . . seem to 

effectively require investment advisors who vote 

proxies on behalf of investor clients to consider and 

evaluate any response from companies to proxy 

advice before submitting votes. That could cause 

significant delays in the already constricted proxy 

voting process. It also could jeopardize the 

independence of proxy advice as proxy advisory 

firms may feel pressure to tilt voting 

recommendations in favor of management more 

often, to avoid critical comments from companies 

that could draw out the voting process and expose 

the firms to costly threats of litigation.’’); US SIF, 

US SIF Releases Statement on SEC Vote to Regulate 

Proxy Advisory Firms (July 22, 2020), available at 

https://www.ussif.org/blog_home.asp?display=146 

(‘‘Today’s vote is a blow to the independence of 

research provided by proxy advisors to 

investors. . . . The rule will make it more difficult, 

expensive and time-consuming for proxy advisors 

to produce their research.’’)). 

119See supra notes 113–116 and accompanying 

text. 

120See supra notes 87–91 and accompanying text. 

121See infra notes 153–154 and accompanying 

text. 

122See infra notes 139–141 and accompanying 

text. 

123See letters from CalPERS; CO Retirement; New 

York Comptroller; Ohio Public Retirement; TRP; 

Washington State Investment. 

124See letters from CII; ICGN; ICI; IAA; MFA. We 

recognize that one commenter cited the Spectrem 

Group survey which indicated that 79% of retail 

investors were in favor of providing registrants with 

an opportunity to review and provide feedback on 

proxy voting advice. See supra note 78 and 

accompanying text; Spectrem Group, Reclaiming 

Main Street: SEC Hears Retail Investors’ Cries for 

Proxy Advisory Oversight 3 (Dec. 16, 2019), 

available at https://spectrem.com/Content_

Whitepaper/white-paper-reclaiming-mainstreet.aspx. We note, however, that no such 

investors submitted comments opposing the 

proposed rescission of the Rule 14a–2(b)(9)(ii) 

conditions. We further note that the Spectrem 

Group survey was conducted in Nov. 2019 with 

respect to the 2019 Proposed Rules rather than the 

2020 Final Rules and, therefore, is less relevant for 

our determination as to whether to rescind the Rule 

14a–2(b)(9)(ii) conditions. In addition, as discussed 

in the 2020 Adopting Release, one commenter on 

the 2019 Proposed Rules ‘‘disputed the 

methodology used’’ in the Spectrem Group survey 

and ‘‘claim[ed] it used leading questions and 

ultimately showed that retail investors are generally 

uninformed about the proxy voting advice market.’’ 

2020 Adopting Release at 55125, n.491. One 

commenter also cited the CCMC and Nasdaq survey 

indicating that 97% of the 182 registrants surveyed 

would utilize the Rule 14a–2(b)(9)(ii) conditions. 

See supra note 78 and accompanying text. But, for 

the reasons discussed above, we do not believe the 

potential benefits of those conditions are justified 

in light of the risks they present. In addition, while 

we recognize that this survey indicates that 

registrants would use the conditions, we do not 

believe that the Rule 14a–2(b)(9)(ii) conditions have 

engendered significant reliance interests for the 

reasons discussed later in this section. 

125See supra notes 80–83, 85 and accompanying 

text. 

126See supra notes 80–82 and accompanying text. 

127See 2020 Adopting Release at 55107. We note 

that the Willis Towers Watson survey and the SCG 

survey both were conducted in Dec. 2019, before 

the Commission adopted the 2020 Final Rules, and 

were submitted by commenters on the 2019 

Proposed Rules. See supra notes 83, 85 and 

accompanying text. The Commission, however, did 

not rely on either survey as support for adopting the 

Rule 14a–2(b)(9)(ii) conditions. We also do not find 

those surveys to be persuasive indicators of 

systemic inaccuracies in proxy voting advice, as 

neither survey identified any specific instances of 

errors in proxy voting advice. In addition, although 

the ACCF study identified 50 and 42 instances, 

respectively, in 2021 and 2020 in which registrants 

filed supplemental proxy materials to dispute the 

data or analysis in a PVAB’s proxy voting advice, 

when compared to the 5,565 and 5,350 unique 

registrants that filed proxy materials with the 

Commission in 2021 and 2020, respectively, see 

infra note 274 and accompanying text, that study 

indicates that only 0.90% of all registrants disputed 

a PVAB’s proxy voting advice in supplemental 

filings in 2021, which is only a 0.11% increase (i.e., 

0.90% versus 0.79%) from 2020. Finally, it is worth 

noting that these percentages may not reflect the 

Continued 

that the Rule 14a–2(b)(9)(ii) conditions 

adequately mitigated those concerns 

and, despite existing mechanisms in the 

proxy voting system that advance 

similar objectives, were justified in light 

of their potential to facilitate timely 

access by PVABs’ clients to information 

material to their voting decisions.115

We weigh these competing concerns 

differently today, especially in light of 

the continued, strong opposition to the 

Rule 14a–2(b)(9)(ii) conditions from 

many institutional investors and other 

PVAB clients as well as many of the 

comments we received on the 2021 

Proposed Amendments. The 

Commission’s 2020 adoption of the Rule 

14a–2(b)(9)(ii) conditions was grounded 

in its view that ‘‘more complete and 

robust information and discussion leads 

to more informed investor decisionmaking.’’ 116 We agree with that general 

principle, but, upon further analysis in 

light of the continued concerns 

expressed by investors and others, we 

now conclude that the potential 

informational benefits to investors of the 

Rule 14a–2(b)(9)(ii) conditions do not 

sufficiently justify the risks they pose to 

the cost, timeliness, and independence 

of proxy voting advice on which many 

investors rely. 

Investor protection has always been 

the touchstone of the Commission’s 

rulemaking efforts with respect to 

PVABs. Accordingly, our decision to 

rescind the Rule 14a–2(b)(9)(ii) 

conditions is significantly informed by 

the concerns expressed by investors and 

other PVAB clients regarding the Rule 

14a–2(b)(9)(ii) conditions. PVABs serve 

an important role in the proxy process, 

and their clients depend on receiving 

independent proxy voting advice in a 

timely manner. The Rule 14a–2(b)(9)(ii) 

conditions were intended to benefit 

PVABs’ clients (i.e., institutional 

investors and investment advisers) and 

the underlying investors they serve, 

among others.117 However, many 

investors and PVAB clients have 

continued to warn, both in response to 

the adoption of the 2020 Final Rules 

and again in comments on the 2021 

Proposing Release, that the Rule 14a– 

2(b)(9)(ii) conditions risk impairing the 

independence and timeliness of proxy 

voting advice and imposing increased 

compliance costs on PVABs, without 

corresponding investor protection 

benefits.118 And, as noted above,119 we 

agree that the risks posed by the Rule 

14a–2(b)(9)(ii) conditions to the cost, 

timeliness, and independence of proxy 

voting advice are sufficiently significant 

such that it is appropriate to rescind the 

conditions now to limit any burdens 

that PVABs and their clients may 

experience. 

Although we recognize that some 

commenters disputed these concerns,120

we nonetheless believe that the risks to 

investors support rescinding the Rule 

14a–2(b)(9)(ii) conditions, particularly 

in light of the limited reliance interests 

at stake 121 and the existence of other 

mechanisms in the proxy system that 

promote informed shareholder 

voting.122 It is also noteworthy that the 

vast majority of PVABs’ clients and 

investors that expressed views on the 

Rule 14a–2(b)(9)(ii) conditions continue 

to be concerned about the risks those 

conditions pose, including institutional 

investors 123 and organizations that 

represent institutional investors and 

investment advisers.124

Nor do we find the studies and 

surveys that some opposing commenters 

cited as support for their continued 

concerns regarding errors in proxy 

voting advice to be persuasive evidence 

for retaining the Rule 14a–2(b)(9)(ii) 

conditions.125 For example, several 

commenters asserted that the ACCF 

study demonstrates the continued 

prevalence of errors in, and 

disagreements by registrants with, proxy 

voting advice.126 As an initial matter, 

we note that the 2020 Final Rules were 

not predicated on any Commission 

finding with regard to the prevalence of 

errors in proxy voting advice,127 which 


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error rates in proxy voting advice, as the fact that 

a registrant raises a dispute regarding proxy voting 

advice in a supplemental filing does not necessarily 

indicate that an error exists in such advice. 128See 2020 Adopting Release at 55103–04. 129See supra note 56 and accompanying text; see 

also letter from ICI (expressing skepticism that the 

Rule 14a–2(b)(9)(ii) conditions would significantly 

improve the accuracy of proxy voting advice). 130ACCF Study, supra note 81, at 14–17. 131 Id. 132See 2020 Adopting Release at 55136 (noting 

that registrants may wish to respond to proxy voting 

advice for various reasons, including ‘‘because they 

have identified what they perceive to be factual 

errors or methodological weaknesses in the 

[PVAB’s] analysis or because they have a different 

or additional perspective with respect to the 

recommendation’’). 133See infra note 142 and accompanying text. 

Although PVABs have introduced certain industrywide practices since the Commission adopted the 

2020 Final Rules, the relevant practices at 

individual PVABs described in the 2021 Proposing 

Release appear to have been in place prior to the 

adoption of the 2020 Final Rules. See 2021 

Proposing Release at 67388 & nn.60–61. 134ACCF Study, supra note 81, at 10–11. 

135See, e.g., 2020 Adopting Release at 55135–36 

(‘‘Providing timely notice to registrants of voting 

advice will allow registrants to more effectively 

determine whether they wish to respond to the 

recommendation by publishing additional soliciting 

materials . . . .’’). While the Rule 14a–2(b)(9)(iv) 

safe harbor is non-exclusive, it also contemplates 

that registrants will file additional soliciting 

materials as it requires a PVAB to have ‘‘written 

policies and procedures that are reasonably 

designed to inform clients who receive proxy voting 

advice when a registrant . . . notifies the [PVAB] 

that it intends to file or has filed additional 

soliciting materials.’’ 17 CFR 240.14a–2(b)(9)(iv). 

136ACCF Study, supra note 81, at 12. 

137See supra note 51 and accompanying text. 

Additionally, it is our understanding that the 

leading PVABs currently provide their clients with 

notifications of and links to filings by registrants 

that are the subject of proxy voting advice in their 

online platforms, which provide a means for clients 

to access additional definitive proxy materials that 

registrants may file in response to proxy voting 

advice. 2021 Proposing Release at 67388, n.57. 

138See supra notes 72–77 and accompanying text. 

139See supra notes 43–47 and accompanying text. 

For example, to the extent that the Rule 14a– 

2(b)(9)(ii) conditions impede the timeliness of 

proxy voting advice, that could impair the ability 

of PVABs’ clients to receive and process that advice 

sufficiently in advance of the relevant shareholder 

vote. 

140See supra note 49 and accompanying text. One 

commenter also stated that it has not experienced 

a significant increase in registrant outreach 

regarding disputes over proxy voting advice since 

the adoption of the 2020 Final Rules, including 

through Glass Lewis’ Report Feedback Service. See 

supra note 58 and accompanying text; see also 2021 

Proposing Release at 67386 (describing Glass Lewis’ 

Report Feedback Service). 

141See 2021 Proposing Release at 67386–87. 

142We note that some commenters expressed 

concerns regarding ISS’ practices. For example, 

several commenters expressed concern that ISS has 

eliminated the opportunity for certain U.S. 

registrants to review draft proxy voting advice 

before ISS sends the advice to its clients. See supra 

note 97 and accompanying text. One of those 

commenters appeared to assert that ISS made this 

change ‘‘in reaction to the SEC’s announcement of 

the non-enforcement of the 2020 Final Rules.’’ 

Letter from CCMC II. However, ISS announced that 

it was making this change as of January 2021, well 

before June 1, 2021, when the Division of 

Corporation Finance issued a statement that it 

would not recommend enforcement action based on 

a 2019 interpretive release (discussed further infra 

note 165 and accompanying text) or the 2020 Final 

Rules during the period in which the Commission 

is considering further regulatory action in this area. 

Compare ISS, FAQs Regarding ISS Proxy Research, 

available at https://www.issgovernance.com/ 

contact/faqs-engagement-on-proxy-research/ 

#1574276867038-b204d1c3-a920 (‘‘In the US, as 

from January 2021, drafts are no longer provided to 

U.S. companies including those in the S&P 500 

index.’’), with Division of Corporation Finance, 

Statement on Compliance with the Commission’s 

2019 Interpretation and Guidance Regarding the 

Applicability of the Proxy Rules to Proxy Voting 

Advice and Amended Rules 14a–1(1), 14a–2(b), 

14a–9, U.S. Securities and Exchange Commission, 

available at https://www.sec.gov/news/publicstatement/corp-fin-proxy-rules-2021-06-01. Given 

this timing, the assertion that ISS formally altered 

its engagement practices as a result of the Division 

was a matter of dispute among 

commenters on both the 2019 Proposed 

Rules 128 and the 2021 Proposed 

Amendments.129 In any event, the ACCF 

study does not, in our view, establish 

the necessity of the Rule 14a–2(b)(9)(ii) 

conditions. Rather, in the 50 instances 

that the study identified, registrants 

were able to effectively review and 

respond to proxy voting advice. Those 

50 instances included situations in 

which a registrant alleged that a PVAB’s 

advice contained a factual or analytical 

error and situations in which the 

registrant had a ‘‘serious dispute’’ with 

a PVAB’s advice (or a combination of 

these concerns).130 The registrant, in 

turn, either provided corrective 

disclosure with respect to the purported 

factual or analytical error or explained 

the basis for its dispute with the proxy 

voting advice.131 This form of discourse 

is precisely what the Commission 

envisioned when adopting the Rule 

14a–2(b)(9)(ii) conditions.132 It is 

noteworthy that registrants were able to 

identify those issues and respond using 

pre-existing mechanisms rather than 

mechanisms that were adopted to satisfy 

the Rule 14a–2(b)(9)(ii) conditions given 

that individual PVABs generally do not 

appear to have implemented new 

practices in response to the 

Commission’s adoption of the 2020 

Final Rules.133

It also is unclear how retaining the 

Rule 14a–2(b)(9)(ii) conditions would 

address concerns raised by the ACCF 

study about the process by which 

registrants respond to proxy voting 

advice. The study asserts that 

supplemental proxy filings, which 

ACCF reviewed to arrive at its findings, 

are costly and burdensome, and subject 

registrants to antifraud liability.134 The 

2020 Adopting Release contemplated, 

however, that even pursuant to the Rule 

14a–2(b)(9)(ii) conditions, registrants 

would respond to proxy voting advice 

via a supplemental proxy filing.135

Finally, although the study asserts that 

the Rule 14a–2(b)(9)(ii) conditions 

‘‘would better ensure that investors 

review information that companies are 

now including in often ignored 

supplemental filings,’’ 136 we expect that 

the types of investors that utilize proxy 

voting advice are sufficiently 

sophisticated to know where to find 

registrants’ responses to such advice.137

We note that several commenters 

expressed concerns regarding the 

potential adverse impacts of rescinding 

the Rule 14a–2(b)(9)(ii) conditions, 

including the ability of registrants to 

address errors in or disagreements with 

proxy voting advice in a timely 

manner.138 To the extent the Rule 14a– 

2(b)(9)(ii) conditions help to facilitate 

timely investor access to information 

material to their voting decisions, we 

recognize that rescinding those 

conditions could reduce those benefits. 

At the same time, we note that any such 

benefits of the Rule 14a–2(b)(9)(ii) 

conditions could be undermined to the 

extent those conditions make proxy 

voting advice more costly or reduce its 

timeliness and independence.139 In our 

judgment, the potential benefits of the 

Rule 14a–2(b)(9)(ii) conditions do not 

justify these risks. 

We also believe that any negative 

effects of rescinding the Rule 14a– 

2(b)(9)(ii) conditions will be mitigated, 

to some extent, by existing mechanisms 

in the proxy system that advance some 

of the same goals. As one commenter 

pointed out, PVABs already are 

incentivized to engage with registrants 

regarding their proxy voting advice, as 

evidenced by the fact that some PVABs 

voluntarily implemented means for 

registrants to communicate their views 

or concerns regarding the PVABs’ 

advice even before the Commission 

adopted the 2020 Final Rules (e.g., Glass 

Lewis’ Report Feedback Service).140

These incentives also are demonstrated 

by the fact that the leading PVABs have 

voluntarily adopted practices that 

provide their clients and registrants 

with some of the opportunities and 

access to information that would have 

been required pursuant to the Rule 14a– 

2(b)(9)(ii) conditions. We described 

those practices in detail in the 2021 

Proposing Release.141 Based on our 

review of PVABs’ public descriptions of 

their policies and procedures, those 

practices appear to remain in place. 

Further, none of the comment letters 

submitted on the 2021 Proposed 

Amendments asserted that PVABs’ 

practices differ from those described in 

the 2021 Proposing Release or that 

PVABs had altered those practices 

described in the release.142


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of Corporation Finance’s statement or in response 

to the 2021 Proposed Amendments is implausible. 

In addition, some commenters noted that ISS 

provides some non-U.S. companies with the 

opportunity to review its draft proxy voting advice 

before its publication. Similarly, one commenter 

asserted that ISS has increasingly resisted making 

changes to its proxy voting advice in response to 

registrant feedback and has been less inclined to 

engage with registrants regarding its proxy voting 

advice. See supra note 96 and accompanying text. 

This commenter asserted that ‘‘[c]ompanies have 

requested discussions with ISS staff to highlight 

errors, omissions, or mischaracterizations, but the 

ISS research team has noticeably scaled back its 

willingness to engage’’ and that ‘‘given that errors 

corrected post-publication necessitate a public alert 

to clients, ISS is far more reticent to make such 

changes and even more resistant if the error 

requires a change in a vote recommendation.’’ 

Letter from CEC. Based on those concerns, the 

commenter appeared to advocate for giving 

registrants the opportunity to review proxy voting 

advice before its publication. Id. (‘‘Thus, fixing 

errors highlighted by companies in a final report is 

much more complex than doing so to a draft 

report.’’). Rescinding the Rule 14a–2(b)(9)(ii) 

conditions, however, should not impact the 

availability of such opportunities because the 

conditions do not require that PVABs provide 

registrants with draft proxy voting advice. We find 

it more relevant that ISS continues to allow any 

registrant to request a copy of its proxy voting 

advice issued under its Benchmark policy 

guidelines free of charge after ISS has disseminated 

the advice to its clients. See ISS, FAQs Regarding 

ISS Proxy Research, available at https://

www.issgovernance.com/contact/faqs-engagementon-proxy-research/#1574276741161-7ca718d3- 

32ae. 143See supra note 92 and accompanying text. 

144See 2021 Proposing Release at 67388. 

145See letter from Glass Lewis (asserting that 

PVABs already are incentivized to engage with 

registrants regarding their proxy voting advice in 

order to provide potentially useful information to 

their clients). 

146See supra note 94 and accompanying text. 

147See 2021 Proposing Release at 67388, nn.60– 

61 and accompanying text. 

148 2020 Adopting Release at 55128–29. 

149 Id. at 55136–39. 

150See supra note 95 and accompanying text. 

151See supra note 53 and accompanying text. 

Those commenters included an institutional 

investor that utilizes proxy voting advice (Ohio 

Public Retirement) and an organization that 

represents institutional investors (CII). Id. With 

respect to PVABs’ incentives, we note that one 

commenter asserted that ‘‘[i]f errors [in proxy voting 

advice] are found, the cost of correcting those errors 

creates a disincentive for [PVABs] to acknowledge 

them.’’ Letter from CEC. We believe, however, that 

the perpetuation of material errors in proxy voting 

advice would reduce the quality and usefulness of 

such advice, which, in the long-term, would reduce 

a PVAB’s credibility in the market and its 

competitiveness. As such, we believe that PVABs 

are financially motivated to address errors in their 

advice. 

152See letters from CII; Ohio Public Retirement. 

153See supra notes 68–69 and accompanying text. 

154See supra note 135 and accompanying text. 

155See supra note 66 and accompanying text. 

Several commenters expressed 

concern that PVABs’ current practices 

are insufficient substitutes for the Rule 

14a–2(b)(9)(ii) conditions.143 As noted 

in the 2021 Proposing Release,144 we 

recognize that those practices do not 

perfectly replicate the requirements of 

the Rule 14a–2(b)(9)(ii) conditions or 

result in the same benefits that those 

conditions were intended to produce. 

Nonetheless, the existence of marketbased incentives for PVABs to provide 

their clients and some registrants with 

some of the opportunities and access to 

information that would have been 

required pursuant to the Rule 14a– 

2(b)(9)(ii) conditions 145—which may 

provide institutional investors and other 

PVAB clients with some of the benefits 

that those conditions were intended to 

produce—reinforces our determination 

that those conditions should be 

rescinded, especially when balanced 

against the risks that those conditions 

present to the cost, timeliness, and 

independence of proxy voting advice. 

Further, one opposing commenter 

asserted that because ISS and Glass 

Lewis already provide registrants with 

access to their advice at the same time 

it is disseminated to their clients, 

compliance with the Rule 14a–2(b)(9)(ii) 

conditions should not be 

burdensome.146 We note, however, that 

ISS and Glass Lewis adopted those 

practices voluntarily, before the 2020 

Final Rules were adopted.147 We believe 

that voluntarily adopted practices, as a 

general matter, would not have the same 

adverse impact on the independence, 

cost, and timeliness of proxy voting 

advice as mandatory measures that 

PVABs may implement solely to comply 

with the Rule 14a–2(b)(9)(ii) conditions, 

as we expect that PVABs would only 

implement voluntary practices to the 

extent that the benefits of such practices 

would exceed their costs. This belief is 

also consistent with the Commission’s 

economic analysis in the 2020 Adopting 

Release, which noted the existence of 

ISS’ and Glass Lewis’ voluntary 

practices 148 but still projected direct 

and indirect costs for PVABs as a result 

of the Rule 14a–2(b)(9)(ii) conditions.149

Although some commenters 

expressed concern that PVABs could 

change their practices to the detriment 

of their clients if the Rule 14a–2(b)(9)(ii) 

conditions are rescinded,150 other 

commenters indicated that there are 

market-based incentives for PVABs to 

maintain the practices they have 

voluntarily adopted 151 and that they see 

little risk that PVABs will change these 

practices.152 In addition, we will 

continue to monitor the PVAB market to 

help ensure that investors are 

adequately protected and have ready 

access to information that allows them 

to make informed voting decisions. To 

the extent that there are changes in 

PVABs’ policies and procedures or new 

entrants to the PVAB market that do not 

adopt policies and procedures 

consistent with best practices, we will 

reevaluate the state of the PVAB market 

and consider whether to take further 

action. 

Some commenters expressed concern 

that both registrants and investors may 

have changed their practices in reliance 

on the Commission’s adoption of the 

2020 Final Rules.153 We note, however, 

that none of the commenters that raised 

such concerns were investors. In 

addition, although some of the 

commenters suggested steps that 

registrants may have taken in reliance 

on the effectiveness of the Rule 14a– 

2(b)(9)(ii) conditions—and one 

commenter that is a registrant asserted 

that it has been preparing for the 

effectiveness of those conditions—these 

commenters did not provide specific 

examples of actions registrants have 

actually taken or costs that registrants 

have actually incurred in preparation 

for the effectiveness of those conditions. 

We recognize that many registrants 

may have anticipated taking advantage 

of the opportunities to review and 

respond to proxy voting advice pursuant 

to the Rule 14a–2(b)(9)(ii) conditions, 

but commenters did not present 

evidence that registrants have incurred 

significant costs or significantly altered 

existing practices in reliance on the 

conditions, nor are we aware of any 

information suggesting that is the case. 

Moreover, we note that the Rule 14a– 

2(b)(9)(ii) conditions only impose 

obligations on PVABs, as opposed to 

registrants, and that the 2020 Adopting 

Release contemplated that, even 

pursuant to the Rule 14a–2(b)(9)(ii) 

conditions, registrants would respond to 

proxy voting advice via existing 

mechanisms (i.e., a supplemental proxy 

filing) that registrants have historically 

utilized.154 Nor is there any other reason 

to believe that the Rule 14a–2(b)(9)(ii) 

conditions have engendered significant 

reliance interests given that the 

conditions were adopted only two years 

ago and took effect less than a year ago. 

Some commenters asserted that it was 

inappropriate for the Commission to 

propose amendments to Rule 14a– 

2(b)(9) before that rule had gone into 

effect.155 To the contrary, we believe it 

is appropriate to proceed expeditiously 

to rescind the Rule 14a–2(b)(9)(ii) 

conditions rather than wait until the 

risks those conditions pose materialize 

and investors are harmed. This belief is 

animated, in large part, by (1) the 

important role that PVABs play in the 

proxy voting process and the scope of 

the potential consequences should that 

role be disrupted, (2) the fact that the 

vast majority of PVABs’ clients that 


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156See supra notes 100–101 and accompanying 

text. 157See supra notes 102–105 and accompanying 

text. 158One commenter asserted that the conflicts of 

interest disclosure requirement in Rule 14a–2(b)(9) 

is ‘‘hollow without assurances that issuers and 

investors are protected from materially false, 

inaccurate and incomplete data as a result of 

unchecked critiques from proxy advisory firm.’’ 

Letter from Natural Gas Services. Notwithstanding 

our rescission of the Rule 14a–2(b)(9)(ii) conditions, 

the fact that proxy voting advice generally will 

remain subject to liability under Rule 14a–9 should 

mitigate this concern. See infra Section II.B. 

159 2021 Proposing Release at 67388–89. 

160See letters from BIO; CII; Glass Lewis; IAA; 

ICI; ISS. 

161See letters from CII; Glass Lewis; IAA; ICI; ISS. 

These commenters generally indicated that because 

the Supplemental Proxy Voting Guidance was tied 

to the 2020 Final Rules, any rescission of those 

rules should also include the Supplemental Proxy 

Voting Guidance. Some of these commenters further 

stated that the Supplemental Proxy Voting 

Guidance was too prescriptive for investment 

advisers. See letters from IAA; Glass Lewis. Other 

commenters suggested the Supplemental Proxy 

Voting Guidance could contribute to uncertainty 

and delays in voting. See letters from CII; IAA. 

Another stated the 2019 Proxy Voting Guidance 

provided sufficient guidance to investment advisers 

on this subject. See letter from ICI. On the other 

hand, one commenter recommended retaining the 

Supplemental Proxy Voting Guidance on the basis 

that it encouraged helpful disclosure to investors. 

See letter from BIO. 

162Commission Guidance Regarding Proxy Voting 

Responsibilities of Investment Advisers, Release 

Nos. IA–5325; IC–33605 (Aug. 21, 2019) [84 FR 

47420, 47424 (Sept. 10, 2019)]. 

163Commission Interpretation Regarding 

Standard of Conduct for Investment Advisers, 

Release No. IA–5248 (June 5, 2019) [84 FR 33669, 

33674 (July 12, 2019)]. 

164 Id. at 33675. 

165Commission Interpretation and Guidance 

Regarding the Applicability of the Proxy Rules to 

Proxy Voting Advice, Release No. 34–86721 (Aug. 

21, 2019) [84 FR 47416 (Sept. 10, 2019)] 

(‘‘Interpretive Release’’). 

166 Id. at 47417–19. 

167 Id. 

168 Id. at 47419. 

169 Id. 

170 Id. 

171 2020 Adopting Release at 55121. 

expressed views on the Rule 14a– 

2(b)(9)(ii) conditions opposed them, and 

(3) our conclusion that the reliance 

interests implicated by rescinding those 

conditions are limited, as discussed 

above. 

Finally, we note that some opposing 

commenters also expressed broader, 

policy-based concerns associated with 

rescinding the Rule 14a–2(b)(9)(ii) 

conditions 156 and the potential 

consequences that may result from such 

rescission.157 Those commenters 

generally appeared to be concerned that 

PVABs’ advice would become largely 

unregulated, especially given the 

important role that PVABs play in the 

proxy process. However, it is important 

to note that, notwithstanding our 

rescission of the Rule 14a–2(b)(9)(ii) 

conditions and our amendment to Rule 

14a–9, proxy voting advice generally 

will remain a ‘‘solicitation’’ under Rule 

14a–1(l)(1)(iii)(A). As such, proxy voting 

advice generally will remain subject to 

Rule 14a–9 liability, and, in order to 

qualify for the exemptions set forth in 

Rules 14a–2(b)(1) and (3) from the proxy 

rules’ information and filing 

requirements, PVABs will have to 

satisfy the conflicts of interest 

disclosure requirements set forth in 

Rule 14a–2(b)(9).158

4. 2020 Supplemental Proxy Voting 

Guidance 

The 2021 Proposing Release requested 

comment on whether the Commission 

should rescind or revise the 

Supplemental Proxy Voting Guidance 

because it was prompted, in part, by the 

adoption of the Rule 14a–2(b)(9)(ii) 

conditions.159 The Supplemental Proxy 

Voting Guidance was intended to assist 

investment advisers in assessing how to 

consider registrant responses to proxy 

voting advice that may become more 

readily available as a result of the 2020 

Final Rules. The Supplemental Proxy 

Voting Guidance also specifically 

addressed situations in which advisers 

use a PVAB’s electronic vote 

management system and related 

disclosure obligations, as well as client 

consent relating to the use of automated 

voting services. The Commission 

received several comments on this 

issue,160 with most of those commenters 

recommending that the Commission 

rescind the Supplemental Proxy Voting 

Guidance.161

We are rescinding the Supplemental 

Proxy Voting Guidance. While aspects 

of the guidance could be relevant to 

investment advisers in situations in 

which they become aware that a 

registrant that is the subject of a voting 

recommendation intends to file or has 

filed additional soliciting materials with 

the Commission setting forth the 

registrant’s views regarding the voting 

recommendation, we are mindful of the 

comments received with respect to the 

Supplemental Proxy Voting Guidance. 

Moreover, we believe that existing 

Commission guidance, including the 

response to Question No. 2 in the 2019 

Proxy Voting Guidance, which 

discusses how advisers could consider 

policies and procedures that provide for 

consideration of additional information 

that may become available regarding a 

particular proposal, will serve to assist 

investment advisers in carrying out their 

obligations under rule 206(4)–6 under 

the Investment Advisers Act of 1940 

and their fiduciary duty in such 

situations.162 Further, an investment 

adviser’s fiduciary duty requires, among 

other things, that an adviser conduct a 

reasonable investigation into an 

investment sufficient not to base its 

advice on materially inaccurate or 

incomplete information.163 The duty of 

loyalty also requires, among other 

things, full and fair disclosure to clients 

about all material facts relating to the 

advisory relationship.164

B. Amendment to Rule 14a–9 

Before adopting the 2020 Final Rules, 

the Commission, in August 2019, issued 

an interpretation and guidance that 

clarified the application of the Federal 

proxy rules to the provision of proxy 

voting advice (the ‘‘Interpretive 

Release’’).165 In the Interpretive Release, 

the Commission explained that the 

determination of whether a 

communication is a solicitation for 

purposes of Section 14(a) of the 

Exchange Act depends upon the specific 

nature, content, and timing of the 

communication and the circumstances 

under which the communication is 

transmitted.166 The Commission stated 

that PVABs’ proxy voting advice 

generally would constitute a solicitation 

subject to the proxy rules.167 As a 

solicitation, proxy voting advice is 

subject to Rule 14a–9. Rule 14a–9 

‘‘prohibits any solicitation from 

containing any statement which, at the 

time and in the light of the 

circumstances under which it is made, 

is false or misleading with respect to 

any material fact.’’ 168 The rule also 

requires that solicitations ‘‘must not 

omit to state any material fact necessary 

in order to make the statements therein 

not false or misleading.’’ 169 The 

Commission noted that although PVABs 

may rely on exemptions from the proxy 

rules’ information and filing 

requirements, even these exempt 

solicitations remain subject to Rule 14a– 

9.170

In the 2020 Adopting Release, the 

Commission codified the guidance set 

forth in the Interpretive Release that 

proxy voting advice is generally subject 

to Rule 14a–9.171 The 2020 Final Rules 

amended Rule 14a–9 by adding 

paragraph (e) to the Note to that rule. 

Paragraph (e) sets forth examples of 

what may, depending on the particular 

facts and circumstances, be misleading 

within the meaning of Rule 14a–9 with 

respect to proxy voting advice. 

Specifically, Note (e) to Rule 14a–9 

provides that the failure to disclose 

material information regarding proxy 

voting advice, ‘‘such as the [PVAB’s] 

methodology, sources of information, or 

conflicts of interest,’’ may, depending 

upon particular facts and circumstances, 

be misleading within the meaning of the 


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172 17 CFR 240.14a–9, note (e). 

173 2020 Adopting Release at 55121. 

174 2021 Proposing Release at 67389–90. 

175 Id. at 67390. 

176 Id. 

177See id. 

178See letters from Alliance; Anonymous 1; Ben 

J.; Better Markets; CalPERS; CII; CO Retirement; D. 

Jamieson; Glass Lewis; IAA; ICGN; ISS; J. Giorgio; 

MFA; NASAA; New York Comptroller; Ohio Public 

Retirement; RK Invest Law and ESG Legal Services; 

US SIF. 

179See letters from IAA; MFA; NASAA; New 

York Comptroller. 

180See letters from CO Retirement; MFA; New 

York Comptroller. 

181See letter from MFA. 

182See id. 

183See letter from Glass Lewis. 

184See letter from NASAA. 

185See letter from CalPERS. 

186See letters from Better Markets; Glass Lewis; 

US SIF. 

187See letter from Glass Lewis. 

188See letters from CII; Glass Lewis. 

189See letter from D. Jamieson. 

190See letters from ACCF; Anonymous 2; A. 

Smith; BIO; BRT; B. Zycher; CBT; CCMC I; CCMC 

II; E. Mills; FedEx; MasterCraft; NAM; Nasdaq; 

Natural Gas Services; NIRI; Pacific Research; Prof. 

Verret; Profs. Rose and Walker; Reps. Steil and 

Huizenga; Steve Milloy (Jan. 3, 2022) (‘‘S. Milloy’’); 

T. Doyle; Virtu. 

191See supra notes 66–70 and accompanying text. 

192See letters from ACCF; NAM; NIRI. 

193See letters from Nasdaq; Natural Gas Services. 

194See letter from T. Doyle. 

195See letter from NAM. 

rule.172 In adopting these amendments, 

the Commission noted that ‘‘[t]he ability 

of a client of a [PVAB] to make voting 

decisions is affected by the adequacy of 

the information it uses to formulate 

such decisions’’ and stated that the 

amendments ‘‘are designed to further 

clarify the potential implications of Rule 

14a–9 for proxy voting advice 

specifically, and to help ensure that 

[PVABs’] clients are provided with the 

material information they need to make 

fully informed decisions.’’ 173

1. Proposed Amendment 

In the 2021 Proposing Release, the 

Commission proposed to amend Rule 

14a–9 by deleting Note (e). The 

proposed amendment was intended to 

address concerns by PVABs, their 

clients, and other investors that the 

Commission’s adoption of Note (e) to 

Rule 14a–9 had created uncertainty 

regarding the application of Rule 14a–9 

to proxy voting advice and that such 

uncertainty unnecessarily increases the 

litigation risk to PVABs and impairs the 

independence of the proxy voting 

advice that investors use to make their 

voting decisions.174 That proposed 

amendment also was intended to 

address any misperception that the 

Commission’s adoption of Note (e) 

purported to determine or alter the law 

governing Rule 14a–9’s application and 

scope, including its application to 

statements of opinion, in order to 

reduce any resulting uncertainty that 

could lead to increased litigation risks, 

or the threat of litigation, and impaired 

independence of proxy voting advice.175

Notwithstanding the proposed 

deletion of Note (e) to Rule 14a–9, the 

Commission stated that PVABs ‘‘may, 

depending on the facts and 

circumstances, be subject to liability 

under Rule 14a–9 for a materially 

misleading statement or omission of 

fact, including with regard to its 

methodology, sources of information or 

conflicts of interest,’’ and that ‘‘such 

conclusion would not be altered by 

virtue of our proposed deletion of Note 

(e).’’ 176 The Commission also provided 

a discussion regarding the application of 

Rule 14a–9 to proxy voting advice, in 

particular with respect to a PVAB’s 

statements of opinion.177

2. Comments Received 

Commenters expressed a range of 

views on the proposed amendment to 

Rule 14a–9. A number of commenters 

supported the proposed deletion of Note 

(e) to Rule 14a–9.178 Some of these 

commenters reiterated the concerns 

regarding the 2020 Final Rules that 

prompted the Commission to issue the 

2021 Proposed Amendments, including 

that the threat of litigation as a result of 

Note (e) would impair the independence 

and decrease the quality of proxy voting 

advice 179 and that heightened legal 

risks as a result of Note (e) would 

increase compliance costs for PVABs, 

which could increase the cost of proxy 

voting advice for their clients.180 One 

commenter also asserted that increased 

costs of proxy voting advice as a result 

of Note (e) could reduce some clients’ 

use of proxy voting advice and result in 

less shareholder engagement and 

participation in shareholder voting and 

that deleting Note (e) would provide 

PVABs with more legal certainty, as 

Note (e) has created ambiguity as to the 

nature and scope of PVABs’ Rule 14a– 

9 liability.181

Further, one commenter expressed 

concern that the examples in Note (e) 

extend beyond material, factual 

information and subject PVABs to the 

threat of litigation in cases where 

registrants may disagree with the 

analysis and voting recommendations 

regardless of whether the advice 

contains factual errors.182 Similarly, one 

commenter suggested that Note (e) 

could invite litigation even if proxy 

voting advice was accurate on the basis 

that it was somehow misleading because 

a PVAB did not disclose enough about 

its methodology, sources of information, 

or conflicts of interest.183 Other 

commenters asserted that Note (e) 

should be deleted because it does not 

appear to add anything of interpretive 

significance 184 and imposes more 

stringent obligations on PVABs than 

registrants.185

In addition to reiterating some of the 

concerns that prompted the 2021 

Proposed Amendments, supporting 

commenters also critiqued the process 

by which the Commission adopted Note 

(e). For example, as noted earlier, some 

commenters asserted that the 2020 Final 

Rules were flawed because they did not 

provide credible evidence of a market 

failure that would warrant further 

regulation of PVABs or their advice.186

Another commenter maintained that the 

Commission neither sufficiently 

explained how the examples in Note (e) 

created a risk of misleading PVABs’ 

clients nor clarified its expectations for 

non-misleading disclosure.187

Finally, and more broadly, some 

commenters asserted that subjecting 

PVABs to Rule 14a–9 liability 

unnecessarily increases PVABs’ 

litigation risks and could impair the 

independence and increase the costs of 

proxy voting advice,188 and another 

commenter expressed concern regarding 

the constitutionality of the 2020 Final 

Rules and requested that the 

Commission ‘‘fix’’ those rules by 

adopting the 2021 Proposed 

Amendments.189

Other commenters opposed deleting 

Note (e).190 Several of those commenters 

expressed process-based concerns 

regarding the 2021 Proposed 

Amendments that were similar to those 

they expressed in the context of the 

proposed amendments to Rule 14a– 

2(b)(9).191

Some commenters opposed deleting 

Note (e) based on concerns regarding the 

detrimental effect that such amendment 

could have on proxy voting advice. For 

example, some commenters stated that 

the deletion of Note (e) would weaken 

antifraud provisions that were intended 

to protect investors against PVABs’ false 

or misleading statements.192 Other 

commenters asserted that deleting Note 

(e) could reduce transparency in the 

public markets 193 and could actually 

lead to increased litigation for 

PVABs.194

In addition, one commenter stated 

that Note (e) is ‘‘critical’’ to ensuring 

that Rule 14a–9 fully and fairly applies 

to PVABs and that they are held to 

comparable liability standards as other 

soliciting entities.195 Other commenters 

asserted, as they did in the context of 

the proposed amendments to Rule 14a– 


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196See letters from ACCF; CCMC II; Natural Gas 

Services; NIRI; Profs. Rose and Walker. See supra 

notes 80–82 and accompanying text for a 

description of the ACCF study. 197See letter from CCMC II. 198See letters from NAM; Profs. Rose and Walker. 199See letters from BRT; CCMC II; T. Doyle. 200See letter from Profs. Rose and Walker. 201See letters from BIO; NIRI. 202See letter from Prof. Verret. 203See id. 204See id. 205See letters from CII; Glass Lewis; ICGN; ISS; 

Ohio Public Retirement. 

206See letter from ICGN. 

207See letters from CII; ISS. 

208See letter from ISS. 

209See letter from Glass Lewis. 

210See letter from ICGN. 

211See letter from CalPERS. 

212See letter from Glass Lewis (citing Regulation 

of Communications Among Shareholders, Release 

No. 34–31326 (Oct. 16, 1992) [57 FR 48276 (Oct. 22, 

1992)]). 

213See id. 

214See supra notes 106–107 and accompanying 

text. 

215See letter from CCMC II. 

216See letters from NAM; NIRI. 

217See letter from Nasdaq. 

218See supra notes 192–193, 195–196, 199–201 

and accompanying text. 

219See 2020 Adopting Release at 55121. 

2(b)(9), that the 2020 Final Rules should 

not be rescinded given the continued 

prevalence of errors in and 

disagreements by registrants with proxy 

voting advice, based on the ACCF 

study.196 Similarly, one commenter 

cited a 2021 research paper that found 

that PVABs’ advice favors ESG 

proposals that may not necessarily be in 

the best economic interests of all 

investors.197

Other commenters disagreed with the 

Commission’s bases for proposing to 

delete Note (e). Several commenters 

disputed the 2021 Proposing Release’s 

suggestion that Note (e) caused 

misperceptions as to the applicability of 

Rule 14a–9 to proxy voting advice.198

Other commenters asserted that the 

deletion of Note (e) will lead to more 

confusion, not less, when interpreting 

the application of the rule to proxy 

voting advice.199 In addition, some 

commenters characterized the deletion 

of Note (e) as exempting PVABs from 

Rule 14a–9 liability 200 and asserted that 

PVABs should be held to the same 

standard of liability and accountability 

as other similar market participants.201

In addition, one commenter addressed 

the Commission’s discussion in the 

2021 Proposing Release regarding the 

application of Rule 14a–9 to proxy 

voting advice.202 The commenter 

expressed concern that the 

Commission’s discussion did not 

‘‘appreciate the wealth of conflicted 

reasons why a [PVAB] may be making 

a recommendation,’’ and stated that a 

PVAB may ‘‘be making a 

recommendation on the basis of little 

evidence despite purporting to conduct 

robust analysis of the vote’s impact on 

shareholder returns.’’ 203 This 

commenter also expressed the view that 

the discussion would not receive any 

judicial deference.204

Some commenters that generally 

supported the proposed deletion of Note 

(e) also recommended that the 

Commission take additional actions to 

address their concerns. For example, 

some commenters recommended that 

the Commission amend Rule 14a–9 to 

expressly exempt all or portions of 

proxy voting advice from liability.205

One of those commenters recommended 

that the Commission amend Rule 14a– 

9 to clarify that PVABs are not liable 

simply because a registrant disagrees 

with their subjective determinations in 

proxy voting advice.206 Other 

commenters recommended that the 

Commission amend Rule 14a–9 to 

exempt PVABs from liability for their 

voting recommendations, any subjective 

determinations they make in 

formulating such recommendations, 

including decisions to use a specific 

analysis, methodology, or information, 

and their decisions regarding how to 

respond to registrants’ disagreements 

with their advice.207 One of those 

commenters stated that such an 

exemption would not harm investors or 

the integrity of the proxy process 

because PVABs are already subject to a 

more relevant and robust antifraud rule 

under the Investment Advisers Act of 

1940.208 Finally, another commenter 

asserted that the Commission should 

amend Rule 14a–9 to provide PVABs 

with a safe harbor from private 

actions.209

In addition, one commenter that 

generally supported deleting Note (e) 

expressed concern that the Commission 

did not consider that the drafting and 

distribution of proxy voting advice to 

clients can be part of a PVAB’s broader 

engagement strategy.210 One commenter 

recommended that the Commission 

require registrants, rather than PVABs, 

to disclose the methodologies and 

assumptions they use to formulate 

disclosures in public filings.211 Another 

commenter recommended that if the 

Commission does not at least partially 

exempt PVABs from Rule 14a–9 liability 

for their proxy voting advice, it should: 

(1) reaffirm its prior statements about 

the ‘‘judgmental’’ nature of most 

corporate governance issues 212 and 

state that subjective determinations on 

corporate governance issues are not 

subject to Rule 14a–9 liability; and (2) 

clarify that when determining whether 

an opinion is actionable under Rule 

14a–9, it is important to consider the 

context in which the statement is 

made.213

Finally, some of the commenters that 

generally opposed deleting Note (e) also 

made recommendations to the 

Commission. Consistent with their 

recommendations regarding the 

proposed amendments to Rule 14a– 

2(b)(9), some commenters recommended 

that the Commission commit to a 

retrospective review of the 2020 Final 

Rules or issue an Advanced Notice of 

Proposed Rulemaking rather than 

adopting the 2021 Proposed 

Amendments.214 One commenter 

recommended that, rather than deleting 

Note (e), the Commission provide an 

interpretation regarding the application 

of Rule 14a–9 to proxy voting advice.215

Other commenters opposed any efforts 

to exempt all or parts of proxy voting 

advice from Rule 14a–9 liability.216

Another commenter recommended an 

alternative approach of amending Note 

(e) to include the Commission’s view 

that Rule 14a–9 liability does not extend 

to mere differences of opinion regarding 

proxy voting advice.217

3. Final Amendment 

We are adopting the amendment to 

Rule 14a–9 as proposed. Specifically, 

we are amending Rule 14a–9 to delete 

Note (e). We reiterate, however, that this 

amendment is not intended to, and does 

not, affect the scope of Rule 14a–9 or its 

application to proxy voting advice, just 

as the adoption of Note (e) in the 2020 

Final Rules was not intended to, and 

did not, affect the scope of Rule 14a–9 

or its application to proxy voting advice. 

Thus, to the extent that a PVAB’s proxy 

voting advice constitutes a 

‘‘solicitation’’ under Rule 14a– 

1(l)(1)(iii)(A), it is subject to liability 

under Rule 14a–9 to the same extent 

that any other solicitation is, or would 

have been, prior to the 2020 Final Rules. 

And, like any other person that engages 

in a solicitation, a PVAB may, 

depending on the facts and 

circumstances, be subject to liability 

under Rule 14a–9 for a material 

misstatement of fact in, or an omission 

of material fact from, its proxy voting 

advice, including with regard to its 

methodology, sources of information, or 

conflicts of interest. 

While several commenters expressed 

concerns regarding the potential impact 

of the deletion of Note (e),218 as the 

Commission explained in the 2020 

Adopting Release, Note (e) itself did not 

alter Rule 14a–9’s application or 

scope.219 Rather, Note (e) was intended 

to further clarify the application of Rule 


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220See id. 

221See supra notes 179–180 and accompanying 

text; see also 2021 Proposing Release at 67389–90 

& n.74. 

222We disagree with those commenters who 

suggested that deleting Note (e) will lead to more 

confusion. See supra note 199 and accompanying 

text. We do not believe that returning to the status 

quo that existed before the addition of Note (e) will 

lead to more confusion particularly in light of our 

repeated emphasis in both this release and the 2021 

Proposing Release that the deletion of Note (e) will 

have no effect on the scope or application of Rule 

14a–9. 

223See supra notes 192, 195, 200 and 

accompanying text. 

224The definition of ‘‘solicitation’’ is set forth in 

Rule 14a–1(l) and includes, in paragraph (1)(iii)(A), 

certain types of proxy voting advice. 17 CFR 

240.14a–1(l)(1)(iii)(A). Rule 14a–9(a), in turn, 

provides that ‘‘[n]o solicitation . . . shall be made 

. . . containing any statement which, at the time 

and in the light of the circumstances under which 

it is made, is false or misleading with respect to any 

material fact, or which omits to state any material 

fact necessary in order to make the statements 

therein not false or misleading.’’ 17 CFR 240.14a– 

9(a). 

225 575 U.S. 175 (2015). 

226 501 U.S. 1083 (1991). While Omnicare 

involved claims brought under Section 11 of the 

Securities Act of 1933, we believe its discussion of 

the circumstances in which a statement of opinion 

may be actionable under that provision applies to 

Rule 14a–9. See Omnicare, 575 U.S. at 185 n.2 

(noting that Rule 14a–9 ‘‘bars conduct similar to 

that described in § 11’’); see also, e.g., Golub v. 

Gigamon, Inc., 994 F.3d 1102 (9th Cir. 2021) 

(holding that the Omnicare standards apply to 

claims under Rule 14a–9); Paradise Wire & Cable 

Defined Benefit Pension Plan v. Weil, 918 F.3d 312, 

322–23 (4th Cir. 2019) (applying the Omnicare 

standards to claims under Rule 14a–9). 227 575 U.S. at 186. 228 Id. at 194. 229 Id. at 184. 230 Id.; see also Virginia Bankshares, 501 U.S. at 

1092, 1095. For example, if a speaker states the 

belief that a company has the highest market share, 

while knowing that the company in fact has the 

second highest market share, that statement of 

belief would be an ‘‘untrue statement of fact’’ about 

the speaker’s own belief. 

231Omnicare, 575 U.S. at 185–86; see also 

Virginia Bankshares, 501 U.S. at 1092, 1095. For 

example, in stating its opinion that shareholders 

should vote for a particular director-candidate, a 

PVAB may support that opinion by reference to that 

candidate’s prior professional experience. Those 

descriptions of the candidate’s professional 

experience would be statements of fact potentially 

subject to liability under Rule 14a–9, 

notwithstanding the context in which they were 

made (i.e., as support for a statement of opinion). 

232Omnicare, 575 U.S. at 188. 

233 Id. at 189. In Omnicare, the court offered the 

example of ‘‘an unadorned statement of opinion 

Continued 

14a–9 to proxy voting advice by 

providing examples of what may, 

depending on the particular facts and 

circumstances, be misleading within the 

meaning of Rule 14a–9 with respect to 

proxy voting advice.220 However, 

PVABs, their clients, and other investors 

have asserted that, instead of clarifying 

the application of Rule 14a–9 to proxy 

voting advice, Note (e) has in fact 

heightened legal uncertainty, 

particularly with respect to PVABs’ 

statements of opinion, and that such 

uncertainty unnecessarily increases the 

litigation risk to PVABs and threatens 

the independence of their advice.221

In retrospect, we conclude that Note 

(e) has created a risk of confusion 

regarding the application of Rule 14a–9 

to proxy voting advice in at least two 

respects. First, the fact that Note (e) 

concerns a particular type of 

solicitation—in contrast to the other 

paragraphs of the note, which apply to 

all types of solicitations— 

unintentionally could imply that proxy 

voting advice poses heightened 

concerns and should be treated 

differently than other types of 

solicitations under Rule 14a–9. Second, 

singling out a PVAB’s methodology, 

sources of information, and conflicts of 

interest as examples of material 

information regarding proxy voting 

advice unintentionally could suggest 

that PVABs have a unique obligation to 

disclose that information with their 

advice. Note (e), however, was not 

intended to impose any such affirmative 

requirement. Whether such information 

must be disclosed depends on the same 

facts and circumstances-based analysis 

that applies to all solicitations. 

Accordingly, because Note (e) appears 

not to have achieved—and, instead, 

appears to have undermined—its stated 

goal, we conclude that deleting Note (e) 

is appropriate.222

Contrary to the concerns expressed by 

some commenters,223 deleting Note (e) 

does not in any respect weaken the 

application of Rule 14a–9 to proxy 

voting advice or otherwise reduce 

antifraud protection for investors. Proxy 

voting advice that falls within the scope 

of Rule 14a–1(l)(1)(iii)(A) is subject to 

liability under Rule 14a–9(a) to the same 

extent as any other solicitation.224 Just 

as the addition of Note (e) did not alter 

the application of Rule 14a–9 to proxy 

voting advice, our deletion of it will not 

do so either. Thus, any suggestion that 

the deletion of Note (e) would provide 

PVABs with an exemption from Rule 

14a–9 liability is incorrect. 

As was the case both before and after 

Note (e) was added to Rule 14a–9, a 

PVAB may, depending on the particular 

facts and circumstances, be subject to 

liability for a material misstatement in, 

or an omission of material fact from, 

proxy voting advice covered by Rule 

14a–1(l)(1)(iii)(A), including with regard 

to its methodology, sources of 

information, or conflicts of interest. 

We recognize that PVABs, their 

clients, and other investors continue to 

express concerns about whether Rule 

14a–9 liability may extend to mere 

differences of opinion regarding proxy 

voting advice. We are therefore 

reiterating our understanding of the 

limited circumstances in which a 

PVAB’s statement of opinion may 

subject it to liability under Rule 14a–9, 

consistent with the discussion in the 

2021 Proposing Release. We recognize 

that the formulation of proxy voting 

advice often requires subjective 

determinations and the exercise of 

professional judgment, and we do not 

interpret Rule 14a–9 to subject PVABs 

to liability for such determinations 

simply because a registrant holds a 

differing view. 

Our understanding that Rule 14a–9 

liability does not extend to mere 

differences of opinion is supported by 

the Supreme Court’s decisions in 

Omnicare, Inc. v. Laborers District 

Council Construction Industry Pension 

Fund 225 and Virginia Bankshares, Inc. 

v. Sandberg.226 As noted above, Rule 

14a–9 prohibits misstatements or 

omissions of ‘‘material fact.’’ In 

Omnicare, the Court explained that ‘‘a 

sincere statement of pure opinion is not 

an ‘untrue statement of material fact’’’ 

even if the belief is wrong.227 Thus, to 

state a claim under Rule 14a–9, it would 

not be enough to allege that a PVAB’s 

opinions—regarding, for example, its 

determination to select a particular 

analysis or methodology to formulate its 

voting recommendations or the ultimate 

voting recommendations themselves— 

were wrong.228

As the Court explained in Omnicare, 

there are three ways in which a 

statement of opinion may be actionable 

as a misstatement or omission of 

material fact. First, every statement of 

opinion ‘‘explicitly affirms one fact: that 

the speaker actually holds the stated 

belief.’’ 229 Thus, a PVAB may be subject 

to liability under Rule 14a–9 for a 

statement of opinion that ‘‘falsely 

describe[s]’’ its view as to the voting 

decision that it believes the client 

should make.230 Second, a statement of 

opinion may contain ‘‘embedded 

statements of fact’’ which, if untrue, 

may be a source of liability under Rule 

14a–9.231 And third, ‘‘a reasonable 

investor may, depending on the 

circumstances, understand an opinion 

statement to convey facts about how the 

speaker has formed the opinion—or, 

otherwise put, about the speaker’s basis 

for holding that view.’’ 232 A PVAB’s 

statement of opinion may thus give rise 

to liability if it ‘‘omits material facts 

about the [PVAB’s] inquiry into or 

knowledge concerning [the] statement’’ 

and ‘‘those facts conflict with what a 

reasonable investor would take from the 

statement itself.’’ 233


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about legal compliance: ‘We believe our conduct is 

lawful.’’’ Id. at 188. The court noted that ‘‘[i]f the 

issuer makes that statement without having 

consulted a lawyer, it could be misleadingly 

incomplete.’’ Id. This example can also be applied 

to a PVAB’s proxy voting advice if, for example, it 

makes a statement of opinion regarding the legality 

of a registrant’s proposal or corporate action 

without having consulted a lawyer. 

234 Id. at 194. We further note that both Omnicare 

and Virginia Bankshares were cases against 

registrants; we are not aware of any enforcement 

actions or private lawsuits against a PVAB based on 

statements of opinion in connection with proxy 

voting matters. 

235This release does not address any duties or 

liabilities that a PVAB may have under the 

Investment Advisers Act of 1940, as applicable. 

236Several commenters expressed concern that a 

statement in the Interpretive Release suggests a 

PVAB may be subject to liability under Rule 14a– 

9 for its ‘‘opinions, reasons, recommendations or 

beliefs’’ even in the absence of a misstatement or 

omission of material fact. See letters from Glass 

Lewis; ISS. That is not the case. Rather, the 

Commission noted, citing Virginia Bankshares, that 

‘‘Rule 14a–9 extends to opinions, reasons, 

recommendations, or beliefs that are disclosed as 

part of a solicitation, which may be statements of 

material facts for purposes of the rule.’’ Interpretive 

Release at 47419 & n.31 (emphasis added). That 

statement is consistent with, and was merely 

intended to reflect, the case law summarized above 

regarding the limited circumstances in which a 

statement of opinion may be actionable under Rule 

14a–9 as a misstatement or omission of material 

fact. 

237See letter from Prof. Verret. 

238 Id. 

239See supra note 217 and accompanying text. 

240See supra notes 205–209 and accompanying 

text. 241See, e.g., supra notes 102–105 and 

accompanying text (expressing concern that, 

without the Rule 14a–2(b)(9)(ii) conditions, PVABs 

will be exempt from the proxy rules’ information 

and filing requirements without sufficient 

alternative investor protection mechanisms, the 

transparency of proxy voting advice could suffer, 

and the conflicts of interest disclosure requirement 

in Rule 14a–2(b)(9)(i) will be hollow); supra notes 

192–193 and accompanying text (expressing 

concern that the deletion of Note (e) will weaken 

antifraud provisions that were intended to protect 

investors against PVABs’ false or misleading 

statements and reduce transparency in the public 

markets); supra note 196 and accompanying text 

(expressing concern regarding the prevalence of 

errors in proxy voting advice); supra note 216 and 

accompanying text (expressing concern about any 

efforts to exempt all or parts of proxy voting advice 

from Rule 14a–9 liability). 

242See supra note 191 and accompanying text. 

243See supra note 155 and accompanying text. 

Further, the timing-based concerns that opposing 

commenters expressed with respect to the 2021 

Proposed Amendments are less relevant with 

respect to Note (e) given that Note (e) became 

effective on Nov. 2, 2020, before we issued the 2021 

Proposed Amendments. 2020 Adopting Release at 

55082, 55122. 

Omnicare and Virginia Bankshares 

support our view that neither mere 

disagreement with a PVAB’s analysis, 

methodology, or opinions, nor a bare 

assertion that a PVAB failed to reveal 

the basis for its conclusions, would 

suffice to state a claim under Rule 14a– 

9. Rather, a litigant ‘‘must identify 

particular (and material) facts’’ 

indicating a misstatement or omission of 

a material fact that renders a PVAB’s 

statements misleading in one of the 

three senses above—which, the 

Supreme Court noted, is ‘‘no small 

task.’’ 234 As such, a PVAB would not 

face liability under Rule 14a–9 for 

exercising its discretion to rely on a 

particular analysis, methodology, or set 

of information—while relying less 

heavily on or not adopting alternative 

analyses, methodologies, or sets of 

information, including those advanced 

by a registrant or other party—when 

formulating its voting 

recommendations. Similarly, a PVAB 

would not face liability under Rule 14a– 

9, for example, simply because it did 

not accept a registrant’s suggested 

revisions to its proxy voting advice 

concerning such discretionary matters. 

Instead, a PVAB’s potential liability 

under Rule 14a–9 235 turns on whether 

its proxy voting advice contains a 

material misstatement or omission of 

fact.236

One commenter asserted that the 

Commission’s discussion in the 2021 

Proposing Release ‘‘fails to appreciate 

that any statements of opinion by 

[PVABs] must be considered as a part of 

the total mix of information being 

provided by [PVABs] as to how their 

opinions are generated’’ and that ‘‘[a]ny 

statement of opinion by a [PVAB] will 

carry with it the implicit representation 

that the opinion was generated using the 

robust methodologies otherwise 

described by [PVABs], and the implicit 

representation that the [PVAB’s] 

opinion is not the result of a conflict of 

interest.’’ 237 However, Omnicare and 

Virginia Bankshares recognize that 

statements of opinion can, in some 

circumstances, carry such implicit 

factual representations as to the basis for 

the opinion. Further, we do not believe 

that the commenter has offered any 

basis to conclude that the principles set 

forth in those cases should or would 

apply differently to proxy voting advice. 

The same commenter also asserted 

that the discussion in the 2021 

Proposing Release will not receive 

judicial deference.238 That assertion 

misunderstands the purpose of that 

discussion, which is to summarize our 

understanding of the applicable case 

law to help clarify for market 

participants the limited circumstances 

in which a PVAB’s statement of opinion 

may be subject to liability under Rule 

14a–9. To the extent this discussion 

does provide such clarity, we believe it 

may help mitigate the concerns 

regarding uncertainty as to the 

application of Rule 14a–9 to PVABs’ 

statements of opinion that could impair 

the independence of their proxy voting 

advice. 

In addition, while one commenter 

recommended that, rather than delete 

Note (e), we should amend it to include 

our view that Rule 14a–9 liability does 

not extend to mere differences of 

opinion regarding proxy voting 

advice,239 we decline to do so. 

Amending Note (e) as that commenter 

suggested would not address our 

reasons for deleting it. For example, 

even with the commenter’s suggested 

change, Note (e) would continue to raise 

a risk of confusion regarding the 

application of Rule 14a–9 to proxy 

voting advice because it would continue 

to single out proxy voting advice and its 

methodology, its sources of information, 

and any conflicts of interest. 

Although some commenters that 

generally supported the 2021 Proposed 

Amendments recommended that we 

exempt all or portions of proxy voting 

advice from Rule 14a–9 liability,240 we 

are not doing so. We believe that the law 

we have summarized above regarding 

the application of Rule 14a–9 to 

statements of opinion adequately 

addresses the concerns that PVABs, 

their clients, and others have expressed 

regarding the potential for perceived 

litigation risks to impair the 

independence of proxy voting advice, 

particularly in conjunction with our 

deletion of Note (e). Exempting all or 

parts of proxy voting advice from Rule 

14a–9 liability entirely could eliminate 

liability even in the narrow 

circumstances considered in Omnicare 

and Virginia Bankshares, in which 

statements of opinion in such advice 

contain a material misstatement or 

omission. We believe that it is 

appropriate to continue to subject proxy 

voting advice to Rule 14a–9 liability for 

material misstatements or omissions to 

help ensure that PVABs’ clients are 

provided with the information they 

need to make fully informed voting 

decisions and to mitigate some of the 

concerns that opposing commenters 

raised in their comment letters.241

Finally, we note that several 

commenters expressed similar processbased concerns regarding the proposed 

deletion of Note (e) as they expressed 

with respect to the proposed 

amendments to Rule 14a–2(b)(9).242

However, for the reasons discussed in 

Section II.A.3 and above, we believe 

that deleting Note (e) is appropriate.243

III. Other Matters 

If any of the provisions of these 

amendments, or the application thereof 

to any person or circumstance, is held 


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244Section 3(f) of the Exchange Act [17 U.S.C. 

78c(f)] directs the Commission, when engaging in 

rulemaking where it is required to consider or 

determine whether an action is necessary or 

appropriate in the public interest, to consider, in 

addition to the protection of investors, whether the 

action will promote efficiency, competition, and 

capital formation. Further, Section 23(a)(2) of the 

Exchange Act [17 U.S.C. 78w(a)(2)] requires the 

Commission when making rules under the 

Exchange Act, to consider the impact that the rules 

would have on competition, and prohibits the 

Commission from adopting any rule that would 

impose a burden on competition not necessary or 

appropriate in furtherance of the purposes of the 

Exchange Act. 

245See 2020 Adopting Release at 55122–32. 

246See U.S. Gov’t Accountability Office, GAO– 

17–47, Report to the Chairman, Subcommittee on 

Economic Policy, Committee on Banking, Housing, 

and Urban Affairs, U.S. Senate, Corporate 

Shareholder Meetings: Proxy Advisory Firms’ Role 

in Voting and Corporate Governance Practices, 6 

(2016), available at https://www.gao.gov/assets/ 

690/681050.pdf (‘‘2016 GAO Report’’). 

247 Id. 

248See ISS, About ISS, available at https://

www.issgovernance.com/about/about-iss. 

249See id. 

250See ISS, Form ADV (Mar. 31, 2022), available 

at https://reports.adviserinfo.sec.gov/reports/ADV/ 

111940/PDF/111940.pdf (‘‘ISS Form ADV filing’’); 

see also 2016 GAO Report, supra note 246, at 9. 

251 2016 GAO Report, supra note 246, at 7. 

252See Glass Lewis, Company Overview, 

available at https://www.glasslewis.com/companyoverview/. 

253 Id. 

254See 2016 GAO Report, supra note 246, at 7. 

255 Id. 

256 Id. 

257 Id. While ISS and Glass Lewis have published 

updated coverage statistics on their websites, the 

most recent data available for Egan-Jones was 

compiled in the 2016 GAO Report. 

258See Order Granting Registration of Egan-Jones 

Rating Company as a Nationally Recognized 

Statistical Rating Organization, Exchange Act 

Release No. 34–57031 (Dec. 21, 2007), available at 

https://www.sec.gov/ocr/ocr-currentnrsros.html#egan-jones. 

259See 2016 GAO Report, supra note 246, at 8, 

41 (‘‘In some instances, we focused our review on 

Institutional Shareholder Services (ISS) and Glass 

Lewis and Co. (Glass Lewis), because they have the 

largest number of clients in the proxy advisory firm 

market in the United States.’’). See also letters in 

response to the SEC Staff Roundtable on the Proxy 

Process from Center on Executive Compensation 

(Mar. 7, 2019) (noting that there are ‘‘two firms 

controlling roughly 97% of the market share for 

such services’’); Society for Corporate Governance 

(Nov. 9, 2018) (‘‘While there are five primary proxy 

Continued 

to be invalid, such invalidity shall not 

affect other provisions or the 

application of such provisions to other 

persons or circumstances that can be 

given effect without the invalid 

provision or application. In particular, 

the amendments to Rule 14a–2(b)(9) 

operate independently from the 

amendments to Rule 14a–9. 

Pursuant to the Congressional Review 

Act, the Office of Information and 

Regulatory Affairs has designated these 

amendments a ‘‘major rule,’’ as defined 

by 5 U.S.C. 804(2). 

IV. Economic Analysis 

As discussed above, the purpose of 

these amendments is to avoid burdens 

on PVABs that may impede and impair 

the timeliness and independence of 

proxy voting advice and avoid 

misperceptions regarding the 

application of Rule 14a–9 liability to 

proxy voting advice, while also 

preserving investors’ confidence in the 

integrity of such advice. Specifically, we 

are amending Rule 14a–2(b)(9) to 

rescind the Rule 14a–2(b)(9)(ii) 

conditions (as well as the related safe 

harbors and exclusions set forth in 

Rules 14a–2(b)(9)(iii) through (vi)) to 

address the risks that these conditions 

pose to the cost, timeliness, and 

independence of proxy voting advice on 

which many investors rely. We also are 

amending Rule 14a–9 to delete 

paragraph (e) of the Note to that rule 

because Note (e) appears not to have 

achieved—and, instead, appears to have 

undermined—its stated goal. 

The discussion below addresses the 

economic effects of the amendments, 

including their anticipated costs and 

benefits, as well as the likely effects of 

the amendments on efficiency, 

competition and capital formation.244

We also analyze the potential costs and 

benefits of reasonable alternatives to 

these amendments. Where practicable, 

we have attempted to quantify the 

economic effects of the amendments; 

however, in most cases, we are unable 

to do so because either the necessary 

data is unavailable or certain effects are 

not quantifiable. 

A. Economic Baseline 

The baseline against which the costs, 

benefits, and the impact on efficiency, 

competition, and capital formation of 

the amendments are measured consists 

of the current regulatory requirements 

applicable to registrants, PVABs, 

investment advisers, and other clients of 

PVABs, as well as current industry 

practices used by these entities in 

connection with the preparation, 

distribution, and use of proxy voting 

advice. 

The 2020 Adopting Release provided 

an overview of the role of PVABs in the 

proxy process, including a discussion of 

existing economic research on PVABs 

and the nature of proxy voting advice 

they provide.245

1. Affected Parties and Current Market 

Practices 

a. Proxy Voting Advice Businesses 

As of November 2021, the proxy 

voting advice industry in the United 

States consists of three major firms: ISS, 

Glass Lewis, and Egan-Jones. 

• ISS, founded in 1985, is a privately 

held company that provides research 

and analysis of proxy issues, custom 

policy implementation, vote 

recommendations, vote execution, 

governance data, and related products 

and services.246 ISS also provides 

advisory/consulting services, analytical 

tools, and other products and services to 

corporate registrants through ISS 

Corporate Solutions, Inc. (a wholly 

owned subsidiary).247 As of May 2022, 

ISS had nearly 2,600 employees in 29 

locations, and covers approximately 

48,000 shareholder meetings in 115 

countries, annually.248 ISS states that it 

executes more than 12.8 million ballots 

annually on behalf of its clients 

representing 5.4 trillion shares.249 ISS is 

registered with the Commission as an 

investment adviser and identifies itself 

as a pension consultant providing 

advice to plans with more than $200 

million as the basis for registering as an 

adviser.250

• Glass Lewis, established in 2003, is 

a privately held company that provides 

research and analysis of proxy issues, 

custom policy implementation, vote 

recommendations, vote execution, and 

reporting and regulatory disclosure 

services to institutional investors.251 As 

of May 2022, Glass Lewis had more than 

380 employees worldwide that provide 

services to more than 1,300 clients that 

collectively manage more than $40 

trillion in assets.252 Glass Lewis states 

that it covers more than 30,000 

shareholder meetings across 

approximately 100 global markets 

annually.253 Glass Lewis is not 

registered with the Commission in any 

capacity. 

• Egan-Jones was established in 2002 

as a division of Egan-Jones Ratings 

Company.254 Egan-Jones is a privately 

held company that provides proxy 

services, such as notification of 

meetings, research, and 

recommendations on selected matters to 

be voted on, voting guidelines, 

execution of votes, and regulatory 

disclosure.255 As of September 2016, 

Egan-Jones’ proxy research or voting 

clients mostly consisted of mid- to largesized mutual funds,256 and the firm 

covered approximately 40,000 

companies.257 Egan-Jones Ratings 

Company (Egan-Jones’ parent company) 

is registered with the Commission as a 

Nationally Recognized Statistical 

Ratings Organization.258

Of these PVABs, ISS and Glass Lewis 

are the largest and most often used for 

proxy voting advice.259 We do not have 


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advisory firms in the U.S., today the market is 

essentially a duopoly consisting of Institutional 

Shareholder Services . . . and Glass Lewis & 

Co. . . . .’’). 

260See 2021 Proposing Release at 67386–87. 

261See id. 

262The BPPG was formed in 2013 after the 

European Securities and Markets Authority 

requested that PVABs engage in a coordinated effort 

to develop an industry-wide code of conduct 

focusing on enhancing transparency and disclosure. 

See Best Practice Principles Oversight Committee, 

Annual Report 2021 at 7 (July 1, 2021), available 

at https://bppgrp.info/wp-content/uploads/2021/ 

07/2021-AR-Independent-Oversight-Committee-forThe-BPP-Group-1.pdf (‘‘2021 Annual Report’’). Its 

six member-PVABs are Glass Lewis, ISS, Minerva, 

PIRC, Proxinvest, and EOS at Federated Hermes. Id. 

263See Stephen Davis, First Independent Report 

on Proxy Voting Advisory Firm Best Practices (July 

14, 2021), available at https://

corpgov.law.harvard.edu/2021/07/14/firstindependent-report-on-proxy-voting-advisory-firmbest-practices/; see also 2021 Annual Report, supra 

note 262. 264The three principles are (1) service quality; (2) 

conflicts-of-interest avoidance or management; and 

(3) communications policy. See 2021 Annual 

Report, supra note 262, at 33–34. 265 2021 Proposing Release at 67388, n.57. 266See ISS Form ADV filing (describing clients 

classified as ‘‘Other’’ as ‘‘Academic, vendor, other 

companies not able to identify as above’’). 

267 Id. 268Foreign private registrants are exempt from the 

Federal proxy rules under Rule 3a12–3(b) of the 

Exchange Act. See 17 CFR 240.3a12–3. 

Furthermore, we are not aware of any asset-backed 

registrants that have a class of equity securities 

registered under Section 12 of the Exchange Act. 

Most asset-backed registrants are registered under 

Section 15(d) of the Exchange Act and thus are not 

subject to the Federal proxy rules. 23 asset-backed 

registrants obtained a class of debt securities 

registered under Section 12 of the Exchange Act as 

of December 2021. As a result, these asset-backed 

registrants are not subject to the Federal proxy 

rules. 

269Under Rule 20a–1 of the Investment Company 

Act, registered management investment companies 

must comply with regulations adopted pursuant to 

Section 14(a) of the Exchange Act that would be 

applicable to a proxy solicitation if it were made 

access to general financial information 

for ISS, Glass Lewis, or Egan-Jones such 

as annual revenues, earnings before 

interest, taxes, depreciation and 

amortization, and net income. We also 

do not have access to client-specific 

financial information or more general or 

aggregate information regarding the 

economics of the PVAB industry. 

As part of our consideration of the 

baseline for the amendments, we focus 

on the industry practice that is 

particularly relevant for the 

amendments to Rule 14a–2(b)(9): 

PVABs’ procedures for engaging with 

registrants. As mentioned above and in 

the 2021 Proposing Release,260 all three 

major PVABs have certain policies, 

procedures, and disclosures in place 

intended to provide assurances to 

clients about the information used to 

formulate the proxy voting advice they 

receive.261 In some cases, PVABs seek 

input from registrants to further these 

objectives. Glass Lewis and Egan-Jones 

offer registrants some form of prerelease review of at least some of their 

proxy voting advice reports, or the data 

used in their reports. ISS does not 

provide draft proxy voting advice to any 

United States registrants, but it engages 

with registrants during the process of 

formulating its proxy voting advice. All 

three PVABs also offer registrants access 

to proxy voting advice after it is 

distributed to clients, in some cases for 

a fee, and offer mechanisms by which 

registrants can provide feedback on 

such advice. Finally, the 2021 Annual 

Report of the Independent Oversight 

Committee (the ‘‘Oversight Committee’’) 

of the Best Practice Principles Group 

(the ‘‘BPPG’’), an industry group 

composed of six PVABs that includes 

ISS and Glass Lewis,262 found that all 

member firms met the standards 

established in the BPPG’s three Best 

Practices Principles for Providers of 

Shareholder Voting Research and 

Analysis,263 which include 

communication with and feedback from 

registrants.264 The Oversight 

Committee—which is composed of nonPVAB stakeholders in proxy voting 

advice, including representatives from 

the institutional investor, registrant, and 

academic communities—is responsible 

for reviewing the BPPG member-PVABs’ 

compliance with the principles. This 

report did not include Egan-Jones 

because it is not a member of the BPPG. 

Additionally, it is our understanding 

that some PVABs currently provide 

their clients with notifications of and 

links to filings by registrants that are the 

subject of proxy voting advice in their 

online platforms.265 These notifications 

and links provide a means for clients to 

access additional definitive proxy 

materials that registrants may file in 

response to proxy voting advice. 

b. Clients of Proxy Voting Advice 

Businesses and Underlying Investors 

Clients that use PVABs for proxy 

voting advice will be affected by the 

amendments. In turn, investors and 

other groups on whose behalf these 

clients make voting determinations will 

be affected. One of the three major 

PVABs—ISS—is registered with the 

Commission as an investment adviser 

and, as such, provides annually updated 

disclosure with respect to its types of 

clients on Form ADV. Table 1 below 

reports client types as disclosed by 

ISS.266

TABLE 1—NUMBER OF CLIENTS BY

CLIENT TYPE

[As of March 31, 2022] 

Type of client a Number of 

clients b

Banking or thrift institutions ........ 193 

Pooled investment vehicles ........ 317 

Investment companies ................ 37 

Pension and profit sharing plans 173 

Charitable organizations ............. 48 

State or municipal government 

entities ..................................... 14 

Other investment advisers .......... 1030 

Insurance companies ................. 53 

Sovereign wealth funds and foreign official institutions ............ 11 

Corporations or other businesses not listed above .......... 79 

Other ........................................... 291 

TABLE 1—NUMBER OF CLIENTS BY

CLIENT TYPE—Continued 

[As of March 31, 2022] 

Type of client a Number of 

clients b

Total ........................................ 2,246 

aThe table excludes client types for which 

ISS indicated either zero clients or fewer than 

five clients. bForm ADV filers indicate the approximate 

number of clients attributable to each type of 

client. If the filer has fewer than five clients in 

a particular category (other than investment 

companies, business development companies, 

and pooled investment vehicles), it may indicate that it has fewer than five clients rather 

than reporting the number of clients. 

Table 1 illustrates the types of clients 

that utilize the services of one of the 

largest PVABs. For example, while 

investment advisers (‘‘Other investment 

advisers’’ in Table 1) constitute a 46 

percent plurality of clients for ISS, other 

types of clients include pooled 

investment vehicles (14 percent) and 

pension and profit sharing plans (eight 

percent). Other clients include 

corporations, charitable organizations, 

and insurance companies.267 Certain of 

these clients, such as pension plans, 

make voting determinations that affect 

the interests of a wide array of 

individual investors, beneficiaries, and 

other constituents. 

c. Registrants 

The amendments also will affect 

registrants that have a class of equity 

securities registered under Section 12 of 

the Exchange Act and non-registrant 

parties that conduct proxy solicitations 

with respect to those registrants.268 In 

addition, there are certain other 

companies that do not have a class of 

equity securities registered under 

Section 12 of the Exchange Act that file 

proxy materials with the Commission. 

Finally, Rule 20a–1 under the 

Investment Company Act subjects all 

registered management investment 

companies to the Federal proxy rules.269


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with respect to a security registered pursuant to 

Section 12 of the Exchange Act. See 17 CFR 

270.20a–1. Additionally, ‘‘registered management 

investment company’’ means any investment 

company other than a face-amount certificate 

company or a unit investment trust. See 15 U.S.C. 

80a–4. 270We estimated the number of registrants with 

a class of securities registered under Section 12 of 

the Exchange Act by reviewing all Forms 10–K and 

10–K/A filed during calendar year 2021 with the 

Commission. After reviewing these forms, we then 

counted the number of unique registrants that 

identify themselves as having a class of securities 

registered under Section 12(b) or Section 12(g) of 

the Exchange Act. This estimate excludes: (1) 

foreign private issuers that filed both Forms 20–F 

and 40–F; (2) asset-backed registrants that filed 

Forms 10–D and 10–D/A; and (3) BDCs that filed 

Form 10–K or an amendment during calendar year 

2021 with the Commission. 

271We identified these issuers as those that: (1) 

are subject to the reporting obligations of Exchange 

Act Section 15(d), but do not have a class of equity 

securities registered under Exchange Act Section 

12(b) or 12(g); and (2) have filed any proxy 

materials during calendar year 2021 with the 

Commission. To identify registrants reporting 

pursuant to Section 15(d) but not registered under 

Section 12(b) or Section 12(g), we reviewed all 

Forms 10–K filed in calendar year 2020 with the 

Commission. We then counted the number of 

unique registrants that identified themselves as 

subject to Section 15(d) reporting obligations with 

no class of equity securities registered under 

Section 12(b) or Section 12(g). 

272We estimated the number of unique registered 

management investment companies based on Forms 

N–CEN filed between Dec. 2020 and Dec. 2021 with 

the Commission. Open-end funds are registered on 

Form N–1A, while closed-end funds are registered 

on Form N–2. Variable annuity separate accounts 

registered as management investment companies 

are trusts registered on Form N–3. 

273Business development companies are a 

category of closed-end investment company that are 

not registered under the Investment Company Act 

[15 U.S.C. 80a–2(a)(48) and 80a–53–64] and have 

been issued an 814-reporting number. Our estimate 

includes 82 BDCs that filed a Form 10–K in 2021, 

as well as 16 BDCs that were not traded. 

274We considered the following proxy materials 

in our analysis: DEF14A; DEF14C; DEFA14A; 

DEFC14A; DEFM14A; DEFM14C; DEFR14A; 

DEFR14C; DFAN14A; N–14; PRE 14A; PRE 14C; 

PREC14A; PREM14A; PREM14C; PRER14A; 

PRER14C. Form N–14 can be a registration 

statement and/or proxy statement. We also 

manually reviewed all Forms N–14 filed during 

calendar year 2021 with the Commission, excluding 

any Forms N–14 that are exclusively registration 

statements from our estimates. 

275See letter from BIO. 

276 Id. 

We note that because registrants are 

owned by investors, effects on 

registrants as a result of the 

amendments will accrue to investors. 

Among the investors in a given 

registrant, there may be individual 

investors or groups of investors that may 

want to influence the direction that the 

registrant should pursue. Those 

individual investors or groups of 

investors could be clients of PVABs. 

Separately, given the principal-agent 

relationship between shareholders and 

management of a corporation, there may 

exist conflicts between management of 

the registrant and investors. Some 

investors therefore may use PVABs’ 

advice as part of their decision-making 

process on a particular matter presented 

for shareholder approval for which 

management’s interests may not be 

aligned with those of investors in 

general. 

We estimate that, as of December 31, 

2021, the amendments may affect 

approximately 18,400 entities. 

Specifically, there were approximately 

5,800 registrants with a class of 

securities registered under Section 12 of 

the Exchange Act 270 and approximately 

30 companies without a class of 

securities registered under Section 12 of 

the Exchange Act that filed proxy 

materials.271 In addition, there were 

12,445 registered management 

investment companies that were subject 

to the proxy rules: (i) 11,780 open-end 

funds, out of which 2,398 were 

Exchange Traded Funds (‘‘ETFs’’) 

registered as open-end funds or openend funds that had an ETF share class; 

(ii) 651 closed-end funds; and (iii) 14 

variable annuity separate accounts 

registered as management investment 

companies.272 We also identified 98 

Business Development Companies 

(‘‘BDCs’’) that could be subject to the 

amendments.273

These estimates are an upper bound 

of the number of potentially affected 

companies because not all of these 

registrants may file proxy materials 

related to a meeting for which a PVAB 

issues proxy voting advice in a given 

year. Out of the approximately 18,300 

potentially affected registrants, 

approximately 5,565 registrants filed 

proxy materials with the Commission 

during calendar year 2021.274 Out of the 

5,565 registrants, 4,621 of these 

registrants (83 percent) were Section 12 

or Section 15(d) registrants and the 

remaining 944 registrants (17 percent) 

were registered management investment 

companies. 

2. Current Regulatory Framework 

On July 22, 2020, the Commission 

adopted the 2020 Final Rules. The 2020 

Final Rules: 

• Amended Rule 14a–1(l) to codify 

the Commission’s interpretation that 

proxy voting advice generally 

constitutes a ‘‘solicitation’’ subject to 

the proxy rules. 

• Adopted Rule 14a–2(b)(9) to add 

new conditions to two exemptions (set 

forth in Rules 14a–2(b)(1) and (3)) that 

PVABs generally rely on to avoid the 

proxy rules’ information and filing 

requirements. Those conditions include: 

Æ New conflicts of interest disclosure 

requirements; and 

Æ The Rule 14a–2(b)(9)(ii) conditions. 

• Amended the Note to Rule 14a–9, 

which prohibits false or misleading 

statements, to include specific examples 

of material misstatements or omissions 

related to proxy voting advice. 

Specifically, Note (e) provides that the 

failure to disclose material information 

regarding proxy voting advice, ‘‘such as 

the [PVAB’s] methodology, sources of 

information, or conflicts of interest’’ 

could, depending upon particular facts 

and circumstances, be misleading 

within the meaning of the rule. 

The changes to the definition of 

‘‘solicitation’’ and to Rule 14a–9 became 

effective on November 2, 2020. The 

conditions set forth in Rule 14a–2(b)(9) 

became effective on December 1, 2021. 

On June 1, 2021, the Division of 

Corporation Finance issued a statement 

that it would not recommend 

enforcement action based on the 

Interpretive Release or the 2020 Final 

Rules during the period in which the 

Commission is considering further 

regulatory action in this area. This staff 

statement did not alter the compliance 

date for the Rule 14a–2(b)(9)(ii) 

conditions. 

B. Benefits and Costs 

In the following sections, we discuss 

the economic effects of the amendments 

in terms of the specific benefits and 

costs of the final amendments. 

Several commenters raised broader 

concerns with how the Commission 

conducted its economic analysis in the 

2021 Proposing Release. One 

commenter asserted the Commission 

did not conduct appropriate due 

diligence in issuing the 2021 Proposing 

Release and instead relied solely on 

statements made by market participants 

in private meetings.275 This commenter 

also contended that, because the 

Commission did not ‘‘possess any 

financial or cost information to support’’ 

its economic analysis, the Commission 

‘‘lacks evidence to support the 

fundamental assumptions that underpin 

the Proposed Rule.’’ 276 We rely on a 

number of sources of information to 

inform our economic analysis, including 

publicly available data. And our 

decision to adopt the amendments does 

not rest on any statements made by 

market participants in private meetings. 

Moreover, for reasons the Commission 

explained at the time, the analysis of the 

economic effects of adopting Rule 14a– 

2(b)(9)(ii) was primarily qualitative in 

nature. In the 2021 Proposing Release, 

and for the same reasons, the 

Commission provided a qualitative 

discussion of the economic effects of 

rescinding the Rule 14a–2(b)(9)(ii) 

conditions. The Commission noted 


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277See letter from CCMC II. 

278The compliance date for the Rule 14a– 

2(b)(9)(ii) conditions was Dec. 1, 2021. On June 1, 

2021, the Division of Corporation Finance issued a 

statement that it would not recommend 

enforcement action based on the Interpretive 

Release or the 2020 Final Rules during the period 

in which the Commission is considering further 

regulatory action in this area. Division of 

Corporation Finance, Statement on Compliance 

with the Commission’s 2019 Interpretation and 

Guidance Regarding the Applicability of the Proxy 

Rules to Proxy Voting Advice and Amended Rules 

14a–1(1), 14a–2(b), 14a–9, U.S. Securities and 

Exchange Commission, available at https://

www.sec.gov/news/public-statement/corp-finproxy-rules-2021-06-01. This staff statement did not 

alter the Dec. 1, 2021 compliance date for the Rule 

14a–2(b)(9)(ii) conditions, and thus we recognize 

that PVABs may have already incurred certain costs 

to modify their systems or otherwise ensure that the 

conditions of the exemption are met. Even so, the 

elimination of these conditions will eliminate any 

ongoing costs or other costs of the conditions that 

have not yet been incurred. To the extent a PVAB 

has not yet incurred any direct costs from the Rule 

14a–2(b)(9)(ii) conditions, the amendments will 

eliminate or avoid potential future costs. 

279See letter from BIO. 

280See 2021 Proposing Release at 67386–87. 

281While some commenters on the 2021 Proposed 

Rules provided cost estimates (e.g., letter from ISS), 

we do not find those estimates persuasive because 

they were based on the 2019 Proposed Rules, which 

were different than the 2020 Final Rules. 

282 44 U.S.C. 3501 et seq. 

283See 2020 Adopting Release at Section V.B.1. 

284See id. 

285See letters from CCMC II; Prof. Verret. 

286See infra Section IV.B.2. 

287See letter from BIO. 

where it lacked data and solicited 

feedback and additional data from 

commenters. Having not received 

information or data that would permit a 

quantitative analysis, we again engage 

in a qualitative analysis of the costs and 

benefits of rescinding the conditions. 

Another commenter expressed 

concern that the economic analysis in 

the 2021 Proposing Release ‘‘makes 

passing reference to impacts on issuers 

and investors’’ and ‘‘focused almost 

entirely on the costs borne and benefits 

received by the PVABs.’’ 277 We 

disagree, however, as, both in the 2021 

Proposing Release and in our discussion 

below, we have substantively discussed 

and weighed the potential effects of the 

amendments on both registrants and 

investors, such as the potential impact 

of the rescission of the notice 

requirement on registrants. 

1. Benefits 

In this section, we discuss benefits of 

the amendments that accrue to PVABs, 

their clients, registrants, and investors. 

The main benefit for PVABs from our 

rescission of the Rule 14a–2(b)(9)(ii) 

conditions would be the reduction of 

any initial or ongoing 278 direct costs 

associated with modifying their current 

systems and methods, or developing 

and maintaining new systems and 

methods. Those costs have been and/or 

will be incurred to satisfy the 

requirement of Rule 14a–2(b)(9)(ii)(A) 

that PVABs adopt and publicly disclose 

written policies and procedures 

reasonably designed to ensure that 

registrants that are the subject of proxy 

voting advice have such advice made 

available to them at or prior to the time 

when such advice is disseminated to 

PVABs’ clients. Additionally, the 

amendments will reduce the direct costs 

of satisfying the requirement of Rule 

14a–2(b)(9)(ii)(B) that PVABs adopt and 

publicly disclose written policies and 

procedures reasonably designed to 

ensure that PVABs provide clients with 

a mechanism by which they can 

reasonably be expected to become aware 

of a registrant’s written statements about 

the proxy voting advice in a timely 

manner before the shareholder meeting 

or, if no meeting, before the votes, 

consents, or authorizations may be used 

to effect the proposed action. Under the 

safe harbor in Rule 14a–2(b)(9)(iv), a 

PVAB could satisfy this requirement by 

providing notice to its clients that the 

registrant has filed or has informed the 

PVAB that it intends to file additional 

soliciting materials and include an 

active hyperlink to those materials on 

EDGAR when available either: (i) on its 

electronic client platform; or (ii) through 

email or other electronic means. Both 

mechanisms for informing clients could 

involve initial set-up costs as well as 

ongoing costs. 

One commenter asserted that it is 

speculative to assume that PVABs 

would realize cost savings as a result of 

the proposed amendments.279

According to this commenter, because 

PVABs have voluntarily adopted 

practices regarding registrant 

interaction, they likely have already 

absorbed any such costs. The same 

commenter also expressed concern that 

the Commission could not quantify 

these costs. We acknowledge, as the 

Commission did in the 2021 Proposing 

Release, that any benefits from the 

amendments in the form of savings in 

initial set-up costs may be limited to the 

extent that PVABs either already had 

similar systems in place to meet the 

requirements of the Rules 14a–2(b)(9)(ii) 

conditions or have made changes to 

come into compliance with those 

conditions.280 Similarly, ongoing cost 

savings may be limited to the extent 

PVABs retain similar systems. We also 

acknowledge that we are unable to 

quantify the full range of PVABs’ costs 

resulting from the 2020 Final Rules, 

which would vary depending on each 

PVAB’s current practices and how they 

implement the new conditions.281 In the 

2020 Adopting Release, for purposes of 

the Paperwork Reduction Act of 1995 

(‘‘PRA’’),282 the Commission estimated 

that each PVAB would incur 2,845 

burden hours to satisfy Rule 14a– 

2(b)(9)(ii)(A) and 2,845 burden hours to 

satisfy Rule 14a–2(b)(9)(ii)(B).283 The 

Commission also estimated that each 

PVAB would incur a burden of between 

50 and 5,690 hours per year associated 

with securing an acknowledgment or 

other assurance that the proxy voting 

advice would not be disclosed.284 We 

believe that the amendments will, at a 

minimum, eliminate these estimated 

PRA burdens, which took into 

consideration that some PVABs may 

have systems and practices in place that 

could substantially mitigate any overall 

burden increases. 

While there could be various ways a 

PVAB could comply with the Rule 14a– 

2(b)(9)(ii) conditions currently, to rely 

on the safe harbor in Rule 14a– 

2(b)(9)(iii), a PVAB must provide 

registrants with a copy of the proxy 

voting advice at no charge. By 

eliminating the Rule 14a–2(b)(9)(ii) 

conditions (and, by extension, the Rule 

14a–2(b)(9)(iii) safe harbor), the 

amendments could lead to an increase 

in PVABs choosing to charge registrants 

for access to their proxy voting advice, 

potentially leading to increased 

revenues for PVABs. 

Some commenters expressed concern 

that the Commission’s discussion of the 

benefits and costs of the proposed 

amendments focused primarily on the 

impact on PVABs, ignoring the impact 

of the amendments on the market more 

broadly.285 Contrary to the commenter’s 

suggestion, we have considered the 

impact of the amendments on other 

parties, including registrants and 

investors generally.286 For example, 

below, we discuss the potential effects 

of the amendments on registrants, 

clients of PVABs, and the investors 

whose interests these clients represent. 

The amendments may also benefit 

other parties. PVABs may pass through 

a portion of the costs of modifying, 

developing, or maintaining systems to 

satisfy the Rule 14a–2(b)(9)(ii) 

conditions to their clients through 

higher fees for proxy voting advice. To 

the extent that rescinding the Rule 14a– 

2(b)(9)(ii) conditions also eliminates 

such costs, the cost savings could be 

passed on to, and therefore could 

benefit, clients of PVABs. One 

commenter, however, stated that it is 

speculative to assume that PVABs’ costs 

would be passed on to clients given the 

duopolistic nature of the PVAB 

market.287


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288See supra note 118. 

289See letter from CII. 

290See letter from BIO. 

291See supra Section II.A.3. 

292See letter from BIO. 

293See supra Section II.B.3. 

294See letter from CEC. 

295As noted in Section IV.A.1.c, approximately 

5,565 registrants filed proxy materials with the 

Commission during calendar year 2021. 

296See 2021 Proposing Release at 67386–87. 

PVABs, their clients, and investors in 

general could also benefit to the extent 

that the final amendments eliminate the 

possible adverse effects of the Rule 14a– 

2(b)(9)(ii) conditions on the 

independence of proxy voting advice.288

Proxy voting advice that is independent 

may provide clients of PVABs and other 

investors, who become aware of such 

recommendations, with information that 

would not otherwise have appeared in 

the proxy or information statement. This 

could help clients of PVABs and other 

investors make better voting and 

investment decisions. One commenter 

expressed the view that the proposed 

amendments would strengthen the 

independence of PVABs.289 Another 

commenter, however, stated that the 

2021 Proposing Release did not provide 

evidence that the 2020 Final Rules 

negatively affected the independence of 

proxy voting advice.290 While we are 

unable to quantify such negative effects 

for the reasons discussed in more detail 

above, we believe that the risks posed 

by the Rule 14a–2(b)(9)(ii) conditions to 

the cost, timeliness, and independence 

of proxy voting advice are sufficiently 

significant such that it is appropriate to 

rescind the conditions now to limit any 

burdens that PVABs and their clients 

may experience.291 In making this 

judgment, we have considered that the 

vast majority of PVABs’ clients and 

investors that expressed views on the 

Rule 14a–2(b)(9)(ii) conditions continue 

to be concerned about the risks those 

conditions pose. 

Finally, one commenter asserted that 

the Commission did not articulate any 

real benefits of deleting Note (e).292 As 

stated in the 2021 Proposing Release, we 

do not expect that the deletion of Note 

(e) will generate any significant benefits 

other than avoiding any misperception 

that its adoption purported to determine 

or alter the law governing Rule 14a–9’s 

application and scope, including its 

application to statements of opinion. 

Deleting Note (e) may reduce any 

increased litigation risk or costs to 

PVABs that such a misperception may 

have caused. Notwithstanding this 

deletion, a PVAB may, depending on 

the particular facts and circumstances, 

be subject to liability under Rule 14a– 

9 for a material misstatement in, or an 

omission of material fact from, proxy 

voting advice covered by Rule 14a– 

1(l)(1)(iii)(A), including with regard to 

its methodology, sources of information, 

or conflicts of interest. 293 Thus, we 

expect that this amendment will not 

have any significant economic effect. 

2. Costs 

The amendments may impose costs 

on the clients of PVABs—and, thereby, 

ultimately the investors they serve—by 

potentially reducing the overall mix of 

information available to those clients as 

they assess proxy voting advice and 

make determinations about how to cast 

their votes. Requiring PVABs to provide 

registrants with proxy voting advice no 

later than the time that they disseminate 

such information to their clients could 

allow registrants to more effectively 

determine whether they wish to respond 

to a recommendation by publishing 

additional soliciting materials and to do 

so in a timely manner before 

shareholders cast their votes. Registrants 

may wish to do so for a variety of 

reasons, including, for example, because 

they may identify what they perceive to 

be factual errors or methodological 

weaknesses in a PVAB’s analysis or 

have a different or additional 

perspective with respect to the advice. 

In either case, clients of PVABs, and 

registrants’ investors in general, might 

have benefited from the availability of 

additional information on which to base 

their voting decisions. Clients of PVABs 

often must make voting decisions in a 

compressed time period. Timely access 

to registrant responses to proxy voting 

advice could facilitate a client’s 

evaluation of the advice by highlighting 

disagreements regarding facts and data, 

differences of opinion, or additional 

perspectives before the client casts its 

votes. To the extent that the 

amendments reduce this type of 

information and it is valuable to 

investors, the amendments may make it 

more costly for investors to obtain such 

information and make timely voting 

decisions. One commenter took the 

position that eliminating the Rule 14a– 

2(b)(9)(ii) conditions would create a 

substantial risk to registrants that they 

would be unable to timely correct errors 

and mischaracterizations in PVABs’ 

proxy voting advice before the annual 

meeting.294 According to this 

commenter, companies must pay close 

attention to proxy voting advice and 

address any errors before investors have 

completed voting because, once 

investors have voted, it is often too late 

to make changes. The longer the time 

period between when a registrant 

identifies an error and responds to it, 

the commenter maintained, the less 

likely the error is to receive the 

investor’s full attention. The same 

commenter also argued that the costs of 

correcting errors creates disincentives 

for PVABs to acknowledge them. To the 

extent that the rescission of the Rule 

14a–2(b)(9)(ii) conditions limit a 

registrant’s ability to timely identify 

errors and mischaracterizations in proxy 

voting advice, the rescission could 

increase costs to investors and 

registrants. We note, however, that the 

error rate in proxy voting advice appears 

to be low. For example, the commenter 

cites the ACCF study that identified 

instances during 2021 in which 

registrants filed supplemental proxy 

materials to dispute the data or analysis 

in proxy voting advice that represented 

less than one percent of the proxy 

materials filed by registrants that 

year.295 Additionally, as mentioned 

above, we believe that the perpetuation 

of material errors in proxy voting advice 

would reduce the quality and usefulness 

of such advice, which, in the long-term, 

would reduce a PVAB’s credibility in 

the market and its competitiveness. As 

such, we believe that PVABs are 

financially motivated to address errors 

in their advice. 

Additionally, to the extent that a 

PVAB might have relied on the safe 

harbor of Rule 14a–2(b)(9)(iii), which 

requires PVABs to provide registrants 

with their proxy voting advice for no 

charge, the amendments may cause 

some registrants to incur costs in the 

form of fees or the purchase of 

additional PVAB services in order to 

obtain and respond to proxy voting 

advice. Investors ultimately will bear 

any such costs. 

The potential cost associated with the 

amendments may be mitigated, 

however, by the practices and standards 

that PVABs have voluntarily adopted to 

help improve the basis of their proxy 

voting advice. For example, some 

PVABs have voluntarily adopted 

practices aimed at enabling feedback 

from certain registrants before and after 

they disseminate proxy voting advice to 

their clients.296 Additionally, the 

BPPG’s principles and the Oversight 

Committee’s role in assessing 

compliance with those principles could 

address some of the concerns 

underlying the Rule 14a–2(b)(9)(ii) 

conditions. Moreover, because PVABs 

voluntarily adopted these practices, we 

believe that they are less likely to 

adversely affect the independence, cost, 

and timeliness of proxy voting advice 

than any additional measures that 


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297See letter from Prof. Verret. 298See id. 299Similar to registrants and PVABs’ clients, 

PVABs may have incurred certain initial costs in 

preparing for compliance with the Rule 14a– 

2(b)(9)(ii) conditions. 

300See id. 

301See, e.g., Commission Interpretation Regarding 

Standard of Conduct for Investment Advisers, 

Release No. IA–5248 (June 5, 2019) [84 FR 33669, 

33671 (July 12, 2019)] (discussing how an 

investment adviser’s duty of loyalty under its 

fiduciary duty requires, amongst other things, that 

it must eliminate or make full and fair disclosure 

of all conflicts of interest which might incline an 

investment adviser—consciously or 

unconsciously—to render advice which is not 

disinterested such that a client can provide 

informed consent to the conflict); see also Rule 

206(4)–6 under the Investment Advisers Act of 

1940, 17 CFR 275.206(4)–6 (prohibiting an 

investment adviser to exercise voting authority with 

respect to client securities, unless the adviser (i) has 

adopted and implemented written policies and 

procedures that are reasonably designed to ensure 

that the adviser votes proxies in the best interest of 

its clients, which procedures must include how the 

investment adviser addresses material conflicts that 

may arise between the adviser’s interests and 

interests of their clients; (ii) discloses to clients how 

they may obtain information from the investment 

adviser about how the adviser voted with respect 

to their securities; and (iii) describes to clients the 

investment adviser’s proxy voting policies and 

procedures and, upon request, furnishes a copy of 

the policies and procedures to the requesting 

client). 

302See letter from CII. 

303PVABs’ clients may also rely on some 

combination of internal and external analysis. 

304See U.S. Gov’t Accountability Office, GAO– 

07–765, Report to Congressional Requesters, 

Corporate Shareholder Meetings: Issues Relating to 

the Firms that Advise Institutional Investors on 

Proxy Voting, 2 (2007), available at https://

www.gao.gov/new.items/d07765.pdf (‘‘2007 GAO 

Report’’). See generally letter in response to the 

2019 Proposing Release from Business Roundtable 

(Feb. 3, 2020) (stating that because many 

institutional investors face voting on a large number 

of corporate matters every year but lack personnel 

and resources for managing such activities, they 

outsource tasks to proxy advisors); letters in 

response to the SEC Staff Roundtable on the Proxy 

Process from BlackRock (Nov. 16, 2018) (stating that 

‘‘BlackRock’s Investment Stewardship team has 

more than 40 professionals responsible for 

developing independent views on how we should 

vote proxies on behalf of our clients’’); NYC 

Comptroller (Jan. 2, 2019) (stating that we ‘‘have 

five full-time staff dedicated to proxy voting during 

peak season, and our least-tenured investment 

analyst has 12 years’ experience applying the NYC 

Funds’ domestic proxy voting guidelines’’). 

305See 2007 GAO Report, supra note 304, at 2; 

see also letter in response to the SEC Staff 

Roundtable on the Proxy Process from Ohio Public 

Retirement (Dec. 13, 2018) (‘‘OPERS also depends 

heavily on the research reports we receive from our 

proxy advisory firm. These reports are critical to the 

internal analyses we perform before any vote is 

submitted. Without access to the timely and 

independent research provided by our proxy 

advisory firm, it would be virtually impossible to 

meet our obligations to our members.’’); Transcript 

of SEC Roundtable on the Proxy Process at 194 

PVABs may have needed to implement 

to satisfy the Rule 14a–2(b)(9)(ii) 

conditions. One commenter noted that 

the Commission’s analysis assumed that 

such voluntary practices would remain 

in place even if the Rule 14a–2(b)(9)(ii) 

conditions are rescinded.297 While we 

cannot know for sure whether these 

voluntary practices will continue, we 

agree with the commenters that asserted 

that PVABs have market-based 

incentives to maintain these practices, 

and we also believe the industry-wide 

standards of BPPG’s principles and the 

role of the Oversight Committee provide 

further incentives for PVABs to do so. 

Moreover, as noted above, we will 

continue to monitor the PVAB market to 

help ensure that investors are 

adequately protected and have ready 

access to information that allows them 

to make informed voting decisions. 

One commenter asserted that 

registrants and clients of PVABs may 

have incurred costs in preparing for the 

2020 Final Rules, such as amending 

proxy voting back-office functions for 

shareholder engagement, designing new 

bylaws or charter provisions that govern 

relationships with shareholders, or 

amending proxy voting policies.298 To 

the extent that registrants and PVABs’ 

clients have taken such steps, 

rescinding the Rule 14a–2(b)(9)(ii) 

conditions would render them 

unnecessary and may lead to their 

reversal, resulting in costs for both 

registrants and PVABs’ clients. But 

commenters have presented no specific 

examples of entities that have actually 

taken action or incurred costs in 

reliance on the Rule 14a–2(b)(9)(ii) 

conditions, nor have commenters 

provided evidence that would allow us 

to quantify those costs or that give 

reason to believe that they are 

significant. At the same time, we expect 

that the amendments will result in costs 

savings for PVABs in the form of some 

initial costs, ongoing direct costs, and 

potential indirect costs they would have 

incurred to comply with the Rule 14a– 

2(b)(9)(ii) conditions.299

One commenter asserted that the 

Commission’s economic analysis failed 

to appreciate the potential for conflicts 

of interest that exist between PVABs 

and the institutional investors that use 

their services, as well as between the 

managers of institutional investor funds 

and the investors whose interests they 

represent.300 While we agree that 

potential conflicts of interest may exist 

between PVABs and their institutional 

clients, we do not believe that the Rule 

14a–2(b)(9)(ii) conditions are necessary 

to address that concern, or that 

rescinding the Rule 14a–2(b)(9)(ii) 

conditions will exacerbate it. Rather, the 

2020 Final Rules address such conflicts 

through Rule 14a–2(b)(9)(i), which 

requires PVABs to provide their clients 

with certain conflicts of interest 

disclosures in connection with their 

proxy voting advice. The current 

rulemaking does not amend Rule 14a– 

2(b)(9)(i). Additionally, PVABs may, 

depending on the particular facts and 

circumstances, be subject to liability 

under Rule 14a–9 for a material 

misstatement in, or omission of material 

fact from, proxy voting advice covered 

by Rule 14a–1(l)(1)(iii)(A), including 

with regard to their methodology, 

sources of information, or conflicts of 

interest. As to potential conflicts 

between managers of institutional 

investor funds and the investors whose 

interests they represent, we believe that 

such conflicts are directly addressed in 

other regulations.301

Finally, just as we do not expect the 

deletion of Note (e) to generate any 

significant benefits, we do not expect 

that its deletion will create any 

significant costs for PVABs, investors, or 

registrants. Given that this amendment 

will not alter a PVAB’s potential 

liability under Rule 14a–9, we expect 

that its economic impact will be 

minimal. One commenter took the 

position that, in addition to deleting 

Note (e), the Commission also should 

exempt certain portions of proxy voting 

advice from Rule 14a–9 liability to 

provide investors with additional 

comfort that they will not indirectly 

bear the costs of litigation on the basis 

of mere disagreements regarding a 

PVAB’s analysis, methodology, or 

sources of information.302 We believe 

that this approach is not appropriate for 

the reasons discussed in Section IV.D.2. 

C. Effects on Efficiency, Competition, 

and Capital Formation 

As discussed in Section IV.A, PVABs 

perform a variety of functions for their 

clients, including analyzing and making 

voting recommendations on matters 

presented for shareholder votes in 

registrants’ proxy statements as an 

alternative or supplement to their 

clients’ own internal resources. Rather 

than using these services, PVABs’ 

clients could instead solely rely upon 

internal resources to research, analyze, 

and execute proxies.303 Given the costs 

of researching and voting proxies, the 

services offered by PVABs may offer 

economies of scale relative to their 

clients performing these functions 

themselves. For example, a GAO study 

found that among 31 institutions, 

including mutual funds, pension funds 

and asset managers, large institutions 

rely less than small institutions on the 

research and recommendations offered 

by PVABs.304 Small institutional 

investors surveyed in the study 

indicated they had limited resources to 

conduct their own research.305


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(Nov. 15, 2018), available at https://www.sec.gov/ 

files/proxy-round-table-transcript-111518.pdf 

(comments of Mr. Scot Draeger, stating that: ‘‘If 

you’ve ever actually reviewed the benchmarks, 

whether it’s ISS or anybody else, they’re very 

extensive and much more detailed than small 

firm[s] like ours could ever develop with our own 

independent research.’’). 

306As noted above, we do not have financial data 

about PVABs, including financial data by services 

provided or by client type. This makes assessments 

on a quantitative basis difficult. 

307See letter in response to the 2019 Proposing 

Release from Minerva Analytics (Feb. 22, 2020), 

available at https://www.sec.gov/comments/s7-22- 

19/s72219-6615792-202950.pdf. In its comment 

letter, Minerva, a PVAB in the U.S. market prior to 

2010, stated that the threat of litigation for ‘‘errors’’ 

is a factor influencing its views on whether to 

reenter the U.S. market. Id. 

308See letter from CII. 

309See letter from BIO. 

310See letters from ICGN; Ohio Public 

Retirement; CII. 

To the extent that the 2020 Final 

Rules increase compliance costs and 

costs related to litigation risk for PVABs 

that could be passed on to clients, the 

amendments would reverse those 

increases along with any related 

decrease in demand for PVABs’ advice. 

If PVABs offer economies of scale 

relative to their clients performing 

certain functions themselves, increased 

demand for, and reliance on, PVABs’ 

services could lead to greater 

efficiencies in the proxy voting process. 

To the extent that the Rule 14a– 

2(b)(9)(ii) conditions impair the 

independence of proxy voting advice or 

reduce the diversity of thought in the 

market for proxy voting advice (e.g., by 

PVABs erring on the side of caution in 

complex or contentious matters), 

eliminating those conditions could 

reverse those effects, resulting in advice 

from PVABs that contributes to more 

informed proxy voting decisions by 

their clients. If clients perceive the 

amendments as positively affecting 

PVABs’ objectivity and independence, 

demand for proxy voting advice could 

increase, and the proxy voting process 

may become more efficient.306

On the other hand, the amendments 

could make the proxy voting process 

less efficient if they reduce the overall 

mix of information available to PVABs’ 

clients and investors in general and the 

information lost is valuable to investors. 

For example, rescinding the Rule 14a– 

2(b)(9)(ii) conditions, may limit prompt 

registrant responses to proxy voting 

advice and investor access to such 

responses, which could make it more 

costly for investors to obtain such 

information and make timely voting 

decisions. 

In addition, any reduction in costs for 

PVABs due to the rescission of the Rule 

14a–2(b)(9)(ii) conditions could increase 

competition for proxy voting advice 

compared to the current baseline, which 

includes the effect of the 2020 Final 

Rules. In particular, if PVABs pass costs 

incurred to comply with the conditions 

on to their clients, the reduction of these 

costs due to the amendments could 

encourage some investors to retain the 

services of PVABs, which could reduce 

the use of internal resources for voting. 

Also, any improvement in the 

independence of proxy voting advice 

that preserves investors’ confidence in 

the integrity of such advice could cause 

PVABs to compete more on this 

dimension. Finally, any reduction in 

compliance costs and costs related to 

litigation risk, if large enough, may 

increase competition among PVABs by 

encouraging entry into the market for 

proxy voting advice.307 However, given 

the fact that there are only three major 

PVABs in the United States, we do not 

expect that the amendments would 

significantly increase the likelihood of 

new entry into this market. 

If the amendments facilitate the 

ability of PVABs’ clients to make 

informed voting determinations, 

investment outcomes could improve for 

investors, which could lead to a greater 

allocation of resources to investment. To 

the extent that the amendments lead to 

more investment, we could expect 

greater demand for securities, which 

could, in turn, promote capital 

formation. Overall, given the many 

factors that can influence the rate of 

capital formation, we expect any effect 

of the amendments on capital formation 

to be small. 

In addition, we do not expect the 

deletion of Note (e) to have any 

significant economic effect on 

efficiency, competition, and capital 

formation. 

Finally, one commenter stated that 

the Commission had properly 

characterized the effects of the proposed 

amendments on efficiency, competition, 

and capital formation.308 Another 

commenter expressed concern regarding 

the duopolistic nature of the PVAB 

market and asserted that the proposed 

amendments would constitute an anticompetitive stance by the 

Commission.309 We disagree with such 

an assessment. As noted above, any 

reduction of compliance costs due to the 

amendments could encourage some 

investors to retain the services of 

PVABs, and any improvement in the 

independence of proxy voting advice 

that preserves investors’ confidence in 

the integrity of such advice could 

increase competition in the PVAB 

market. 

D. Reasonable Alternatives 

1. Interpretive Guidance Regarding 

Whether Systems and Processes Satisfy 

the Rule 14a–2(b)(9)(ii) Conditions 

As an alternative to rescinding the 

Rule 14a–2(b)(9)(ii) conditions, we 

could issue interpretive guidance 

regarding whether the systems and 

processes that PVABs have in place 

satisfy the Rule 14a–2(b)(9)(ii) 

conditions, which could reduce 

compliance costs and address concerns 

regarding the independence of proxy 

voting advice. This approach could 

reduce PVABs’ initial or ongoing costs 

of complying with these conditions if 

we determine that their current systems 

and processes already satisfy them to 

the extent that PVABs have not already 

modified their existing business models. 

Such guidance also could mitigate 

concerns that these conditions could 

impair the independence of proxy 

voting advice by indicating that PVABs 

need not modify their practices. 

However, this approach would only 

eliminate the potential adverse effects 

associated with the Rule 14a–2(b)(9)(ii) 

conditions if we were to determine that 

PVABs’ pre-existing systems and 

processes already fully satisfy the 

conditions. But, as discussed above, 

while we believe that PVABs’ current 

practices advance a number of the goals 

that underlie the Rule 14a–2(b)(9)(ii) 

conditions and will mitigate any 

adverse impact from their rescission, 

those practices do not replicate the Rule 

14a–2(b)(9)(ii) conditions in all respects. 

And PVABs’ consistent opposition to 

the 2020 Final Rules further supports 

that conclusion. 

2. Exempting Certain Portions of 

PVABs’ Proxy Voting Advice From Rule 

14a–9 Liability 

Rather than, or in addition to, deleting 

Note (e) to Rule 14a–9, we could exempt 

certain portions of proxy voting advice 

from Rule 14a–9 liability. For example, 

we could amend Rule 14a–9 to 

expressly state that a PVAB would not 

be subject to liability under that rule for 

any subjective determinations it makes 

in formulating its recommendations, 

including its decision to use a specific 

analysis, methodology or information. 

Several commenters generally 

supported this alternative.310 The 

benefit of this alternative could be that 

it may give PVABs additional comfort 

that they will not be subject to liability 

under Rule 14a–9 on the basis of mere 


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311 44 U.S.C. 3507(d); 5 CFR 1320.11. 

312 17 CFR 240.14a–1 et seq. 

313To the extent that a person or entity incurs a 

burden imposed by Regulation 14A, it is 

encompassed within the collection of information 

estimates for Regulation 14A. This includes 

registrants and other soliciting persons preparing, 

filing, processing and circulating their definitive 

proxy and information statements and additional 

soliciting materials, as well as the efforts of third 

parties such as PVABs whose proxy voting advice 

falls within the ambit of the Federal rules and 

regulations that govern proxy solicitations. 

314See letter from CCMC I. 

315See discussion supra note 71. 

316 2021 Proposing Release at 67396. 

317 Id. 

318The PRA requires that we estimate ‘‘the total 

annual reporting and recordkeeping burden that 

will result from the collection of information.’’ 5 

CFR 1320.5(a)(1)(iv)(B)(5). A ‘‘collection of 

information’’ includes any requirement or request 

for persons to obtain, maintain, retain, report or 

publicly disclose information. 5 CFR 1320.3(c). 

OMB’s current inventory for Regulation 14A, 

therefore, is an assessment of the paperwork burden 

associated with such requirements and requests 

under the regulation, and this PRA is an assessment 

of changes to such inventory expected to result 

from these amendments. While other parties, such 

a disagreement regarding their analysis, 

methodology or sources of information. 

This alternative, however, could 

result in uncertainty and litigation over 

the scope of any exemption from Rule 

14a–9 liability. Moreover, as discussed 

above, we believe that existing law 

regarding the application of Rule 14a–9 

to statements of opinion adequately 

addresses the concerns that PVABs, 

their clients, and others have expressed 

regarding the potential for perceived 

litigation risks to impair the 

independence of proxy voting advice, 

particularly in conjunction with our 

deletion of Note (e). Exempting all or 

parts of proxy voting advice from Rule 

14a–9 liability entirely could eliminate 

liability even in the narrow 

circumstances considered in Omnicare 

and Virginia Bankshares in which 

statements of opinion in such advice 

contain a material misstatement or 

omission. We believe that it is 

appropriate to continue to subject proxy 

voting advice to Rule 14a–9 liability for 

material misstatements or omissions to 

help ensure that PVABs’ clients are 

provided with the information they 

need to make fully informed voting 

decisions and to mitigate some of the 

concerns that opposing commenters 

raised in their comment letters. 

V. Paperwork Reduction Act 

A. Background 

Certain provisions of our rules, 

schedules and forms that will be 

affected by the final amendments 

contain ‘‘collection of information’’ 

requirements within the meaning of the 

PRA. We published a notice requesting 

comment on changes to these collection 

of information requirements in the 

Proposing Release and submitted these 

requirements to the Office of 

Management and Budget (‘‘OMB’’) for 

review in accordance with the PRA.311

The hours and costs associated with 

maintaining, disclosing, or providing 

the information required by the final 

amendments constitute paperwork 

burdens imposed by such collection of 

information. An agency may not 

conduct or sponsor, and a person is not 

required to comply with, a collection of 

information unless it displays a 

currently valid OMB control number. 

The title for the affected collection of 

information is: ‘‘Regulation 14A 

(Commission Rules 14a–1 through 14a– 

21 and Schedule 14A)’’ (OMB Control 

No. 3235–0059). 

We adopted existing Regulation 

14A 312 pursuant to the Exchange Act. 

Regulation 14A and its related 

schedules set forth the disclosure and 

other requirements for proxy statements, 

as well as the exemptions therefrom, 

filed by registrants and other soliciting 

persons to help investors make 

informed voting decisions.313 A detailed 

description of the final amendments, 

including the need for the information 

and its proposed use, as well as a 

description of the likely respondents, 

can be found in Section II, and a 

discussion of the expected economic 

effects of the final amendments can be 

found in Section IV. 

B. Summary of Comment Letters on PRA 

Estimates 

We did not receive any comment 

letters in response to the request for 

comment on the PRA estimates and 

analysis included in the 2021 Proposing 

Release. We did, however, receive one 

comment letter stating that ‘‘the 

proposal requests comments on an array 

of complex issues that cannot be 

addressed within 30 days,’’ and noting 

that the 30-day comment period on the 

2021 Proposed Amendments ‘‘also 

applies to comments on the proposed 

burden analysis for the information 

collections associated with the 

Proposal.’’ 314 That commenter 

expressed concern that ‘‘[t]here is no 

guarantee’’ as to how quickly the 

Commission’s Office of FOIA Services 

will process requests for materials 

submitted to OMB by the Commission 

regarding the collection of information 

required by the 2021 Proposed 

Amendments. For the reasons discussed 

above, we believe that the comment 

period provided adequate opportunity 

for interested parties to share their 

views.315

C. Burden and Cost Estimates for the 

Final Amendments 

Below we estimate the incremental 

and aggregate effect on paperwork 

burden as a result of the final 

amendments, which, as discussed in 

Section II, we are adopting as proposed. 

Most, if not all, of the effect on 

paperwork burden as a result of the final 

amendments derives from the rescission 

of the Rule 14a–2(b)(9)(ii) conditions 

and the related safe harbors set forth in 

Rules 14a–2(b)(9)(iii) and (iv), as we 

expect those amendments will reduce 

the paperwork burden associated with 

Rule 14a–2(b)(9). 

As discussed in Section II, we are 

adopting the 2021 Proposed 

Amendments as proposed. Further, 

because we did not receive any 

comment letters directly addressing the 

PRA estimates and analysis included in 

the 2021 Proposing Release, we have not 

adjusted those estimates to account for 

comments. In the 2021 Proposing 

Release, the Commission noted that 

‘‘because Rule 14a–2(b)(9) has not yet 

become effective, that rule has not yet 

resulted in any paperwork burden, and 

there is nothing yet to reduce.’’ 316 As 

such, the PRA analysis in the 2021 

Proposing Release ‘‘instead set forth the 

estimated amount of paperwork burden 

that the parties affected by Rule 14a– 

2(b)(9) would avoid as a result of [the] 

proposed amendments to Rule 14a– 

2(b)(9).’’ 317 However, Rule 14a–2(b)(9) 

became effective on December 1, 2021, 

after the Commission issued the 2021 

Proposing Release. We have, therefore, 

revised the PRA analysis to reflect our 

expectation that the final amendments 

will reduce, rather than avoid, the 

burdens associated with Rule 14a– 

2(b)(9). 

1. Impact on Affected Parties 

As discussed in Section IV.A.1, the 

final amendments may directly or 

indirectly affect a variety of parties. 

These parties include PVABs; the 

clients to whom PVABs provide proxy 

voting advice; investors and other 

groups on whose behalf the clients of 

PVABs make voting determinations; 

registrants who are conducting 

solicitations and are the subject of proxy 

voting advice; and the registrants’ 

shareholders, who ultimately bear the 

costs and benefits to the registrant 

associated with the outcome of voting 

matters covered by proxy voting advice. 

Of these parties, we expect that PVABs 

will experience some reduction in 

paperwork burden as a result of the final 

amendments.318 As discussed further 


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as the clients of PVABs, may experience benefits 

and costs associated with the amendments, see 

supra Section IV.B, only PVABs and registrants will 

avoid any additional paperwork burden as a result 

of the amendments. 

319The deletion of Note (e) may relieve PVABs of 

direct costs to the extent that Note (e) prompted 

PVABs to provide additional disclosure about the 

bases for their proxy voting advice. However, we 

expect any such costs would be minimal because 

the adoption of that Note neither represented a 

change to existing law nor broadened the concept 

of materiality or created a new cause of action. See 

2020 Adopting Release at 55146, n.685. Similarly, 

we expect that any avoidance of incremental 

burdens associated with this amendment would be 

minimal because our deletion of Note (e) does not 

alter the application of Rule 14a–9 to proxy voting 

advice. See supra Section II.B.3. 

320See generally supra Section IV.B.1 (discussing 

the difficulty in providing quantitative estimates of 

the benefits to PVABs associated with the 

amendments). 

321 2020 Adopting Release at 55148–49. 

below, we believe that any incremental 

decrease in these burdens would be 

attributable to the rescission of Rule 

14a–2(b)(9)(ii). We do not expect that 

the deletion of Note (e) to Rule 14a–9 

will have a significant economic impact 

because it will not change existing law 

and, therefore, will not change 

respondents’ legal obligations.319

Moreover, any impact arising from this 

amendment should not materially 

change the average PRA burden hour 

estimates associated with Regulation 

14A. Thus, we have not made any 

adjustments to our PRA burden 

estimates as a result of the deletion of 

Note (e). 

a. Proxy Voting Advice Businesses 

We expect that our amendments to 

Rule 14a–2(b)(9) will decrease the 

paperwork burden for PVABs. Rule 14a– 

2(b)(9) applies to anyone relying on the 

exemptions in Rules 14a–2(b)(1) or 

(b)(3) who furnishes proxy voting advice 

covered by Rule 14a–1(l)(1)(iii)(A). The 

amount by which a PVAB’s burden will 

decrease depends on a number of factors 

that are firm-specific and highly 

variable, which makes it difficult to 

provide reliable quantitative 

estimates.320

Two components of the amendments 

to Rule 14a–2(b)(9) should decrease 

PVABs’ paperwork burden. First, under 

Rule 14a–2(b)(9)(ii)(A), PVABs are 

required to adopt and publicly disclose 

written policies and procedures 

reasonably designed to ensure that 

registrants that are the subject of the 

proxy voting advice have such advice 

made available to them at or prior to the 

time such advice is disseminated to the 

PVABs’ clients. Second, under Rule 

14a–2(b)(9)(ii)(B), PVABs are required to 

adopt and publicly disclose written 

policies and procedures reasonably 

designed to ensure that PVABs provide 

their clients with a mechanism by 

which they can reasonably be expected 

to become aware of a registrant’s written 

statements about the proxy voting 

advice in a timely manner before the 

shareholder meeting. The final 

amendments will rescind both of these 

rules, thereby relieving PVABs of the 

obligation to comply with these 

requirements. The final amendments 

will also rescind the non-exclusive safe 

harbors set forth in Rules 14a–2(b)(9)(iii) 

and (iv) that PVABs may use to satisfy 

the Rule 14a–2(b)(9)(ii) conditions. We 

address each of these components in 

turn. 

In the 2020 Adopting Release,321 the 

Commission estimated that PVABs 

would incur an annual incremental 

paperwork burden to comply with Rules 

14a–2(b)(9)(ii), (iii) and (iv) as follows: 

Requirement PVAB estimated incremental annual compliance burden 

Rule 14a–2(b)(9)(ii)(A)—Notice to Registrants and Rule–14a 2(b)(9)(iii) 

Safe Harbor. 

Increase in paperwork burden corresponding to: 

The PVAB has adopted and publicly disclosed written policies and procedures reasonably designed to ensure that registrants who are the 

subject of proxy voting advice have such advice made available to 

them at or prior to the time the advice is disseminated to clients of 

the PVAB. 

Safe Harbor—The PVAB has written policies and procedures that 

are reasonably designed to provide a registrant with a copy of 

the PVAB’s proxy voting advice, at no charge, no later than the 

time it is disseminated to the PVAB’s clients. Such policies and 

procedures may include conditions requiring that: 

(A) The registrant has filed its definitive proxy statement at 

least 40 calendar days before the security holder meeting 

date (or if no meeting is held, at least 40 calendar days before the date the votes, consents, or authorizations may be 

used to effect the proposed action); and 

(B) The registrant has acknowledged that it will only use the 

copy of the proxy voting advice for its internal purposes 

and/or in connection with the solicitation and it will not be 

published or otherwise shared except with the registrant’s 

employees or advisers. 

To the extent that the PVAB’s current practices and procedures are not 

already sufficient: 

Æ Developing new or modifying existing systems, policies and 

methods, or developing and maintaining new systems, policies 

and methods to ensure that it has the capability to timely provide each registrant with information about its proxy voting advice necessary to satisfy the requirement in Rule 14a– 

2(b)(9)(ii)(A) and/or the safe harbor in Rule 14a–2(b)(9)(iii); 

Æ If applicable, obtaining acknowledgments or agreements with respect to use of any information shared with the registrant; and 

Æ Delivering copies of proxy voting advice to registrants. 

We estimate the increase in paperwork burden to be 8,535 hours per 

PVAB, consisting of 2,845 hours for system updates and 5,690 

hours for acknowledgments regarding sharing information. 

Rule 14a–2(b)(9)(ii)(B)—Notice to Clients of Proxy Voting Advice Businesses and Rule 14a–2(b)(9)(iv) Safe Harbor Increase in paperwork burden corresponding to: 


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322This represented the annual total burden 

increase expected to be incurred by PVABs (as an 

average of the yearly burden predicted over the 

three-year period following adoption of the 2020 

Final Rules) and was intended to be inclusive of all 

burdens reasonably anticipated to be associated 

with compliance with the Rule 14a–2(b)(9)(ii) 

conditions. We are aware of three PVABs in the 

U.S. (i.e., Glass Lewis, ISS, and Egan-Jones) whose 

activities fall within the scope of proxy voting 

advice constituting a solicitation under amended 

Rule 14a–1(l)(1)(iii)(A). The Commission estimated 

that each of these would have a burden of 11,380 

hours per year associated with Rules 14a–2(b)(9)(ii), 

(iii), and (iv). See 2020 Adopting Release at n.700. 

The Commission recognized that there could be 

other PVABs, including both smaller firms and 

firms operating outside the U.S., which may also be 

subject to those rules. However, that number was 

expected to be small. Accordingly, rather than 

increasing the estimate of the number of affected 

PVABs beyond the three discussed above, the 

Commission increased the annual total burden 

estimate by 500 hours to account for those 

businesses. However, that 500 hour increase also 

accounted for the burden imposed by Rule 14a– 

2(b)(9)(i), which is not affected by the amendments. 

Because the Commission did not indicate, in the 

2020 Adopting Release, what portion of that 500 

hour increase would be attributable to the various 

conditions in Rule 14a–2(b)(9), we do not include 

that 500 hour increase in this PRA analysis in order 

to avoid overestimating the amount of burden that 

PVABs would be relieved of as a result of the 

amendments. 

323 2020 Adopting Release at 55149. 

324 Id. at 55149–50. The Commission also noted 

that such burden increase would be offset against 

any corresponding reduction in burden resulting 

from the registrant forgoing other methods of 

responding to the proxy voting advice (such as 

investor outreach) that the registrant determines are 

no longer necessary or are less preferable in light 

of Rule 14a–2(b)(9). Id. at 55150, n.705. 

Requirement PVAB estimated incremental annual compliance burden 

The PVAB has adopted and publicly disclosed written policies and procedures reasonably designed to ensure that the PVAB provides clients with a mechanism by which they can reasonably be expected to 

become aware of any written statements regarding proxy voting advice by registrants who are the subject of such advice, in a timely 

manner before the shareholder meeting. 

Safe Harbor—The PVAB has written policies and procedures that 

are reasonably designed to inform clients who receive the proxy 

voting advice when a registrant that is the subject of such voting 

advice notifies the proxy voting advice business that it intends to 

file or has filed additional soliciting materials with the Commission setting forth the registrant’s statement regarding the voting 

advice, by: 

(A) providing notice to its clients on its electronic client platform that the registrant intends to file or has filed such additional soliciting materials and including an active hyperlink to 

those materials on EDGAR when available; or 

(B) The PVAB providing notice to its clients through email or 

other electronic means that the registrant intends to file or 

has filed such additional soliciting materials and including an 

active hyperlink to those materials on EDGAR when available. 

To the extent that the PVAB’s current practices and procedures are not 

already sufficient: 

Developing new or modifying existing systems, policies and methods, or developing and maintaining new systems, policies and 

methods capable of: 

Æ Tracking whether the registrant has filed additional soliciting 

materials; 

Æ Ensuring that PVABs provide clients with a means to learn 

of a registrant’s written statements about proxy voting advice in a timely manner that satisfies the requirement in 

Rule 14a–2(b)(9)(ii)(B) and/or the safe harbor in Rule 14a– 

2(b)(9)(iv). 

If relying on the safe harbor in Rule 14a–2(b)(9)(iv)(A) or (B), the 

associated paperwork burden would include the time and effort 

required of the PVAB to: 

Æ provide notice to its clients through the PVAB’s electronic 

client platform or email or other electronic medium, as appropriate, that the registrant intends to file or has filed additional soliciting materials setting forth its views about the 

proxy voting advice; and 

Æ include a hyperlink to the registrant’s statement on EDGAR 

We estimate the increase in paperwork burden to be 2,845 hours per 

PVAB. 

Total 11,380 hours per PVAB. 

Altogether, the Commission estimated 

an annual total increase of 34,140 

hours 322 in compliance burden to be 

incurred by PVABs that would be 

subject to Rules 14a–2(b)(9)(ii), (iii), and 

(iv). Accordingly, we expect that the 

final amendments will decrease PVABs’ 

burdens by the same amount. 

b. Registrants 

In addition to PVABs, we anticipate 

that the final amendments to Rule 14a– 

2(b)(9) will decrease the paperwork 

burden for registrants. In the 2020 

Adopting Release, the Commission 

noted that registrants could, as a result 

of the adoption of Rule 14a–2(b)(9), 

experience increased burdens associated 

with coordinating with PVABs to 

receive proxy voting advice, reviewing 

proxy voting advice, and preparing and 

filing supplementary proxy materials in 

response to proxy voting advice, if they 

choose to do so.323 Because Rule 14a– 

2(b)(9) does not require registrants to 

engage with PVABs or take any action 

in response to proxy voting advice, the 

Commission stated that it expected a 

registrant would bear additional 

paperwork burden only if such 

registrant anticipated the benefits of 

engaging with the PVABs would exceed 

the costs of participation. The 

Commission noted that these costs 

would vary depending upon the 

particular facts and circumstances of the 

proxy voting advice and any issues 

identified therein, as well as the 

resources of the registrant, which made 

it difficult to provide a reliable 

quantifiable estimate of these costs. 

Notwithstanding those difficulties, 

the Commission estimated an average 

increase of 50 hours per registrant in 

connection with Rule 14a–2(b)(9) for a 

total annual increase of 284,500 hours, 

assuming that a registrant’s annual 

meeting of shareholders is covered by at 

least two of the three major PVABs in 

the United States, and the registrant has 

opted to review both sets of proxy 

voting advice and file additional 

soliciting materials in response.324

Accordingly, we expect that by 

rescinding the Rule 14a–2(b)(9)(ii) 

conditions, the final amendments will 

decrease registrants’ paperwork burdens 

by the same amount. 

2. Aggregate Decrease in Burden 

Table 1 summarizes the calculations 

and assumptions used to derive our 

estimates of the aggregate decrease in 

burden for all affected parties due to our 

rescission of the Rule 14a–2(b)(9)(ii) 

conditions. 


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325For purposes of the Regulation 14A collection 

of information, the number of annual responses 

corresponds to the estimated number of new filings 

that will be made each year under Regulation 14A. 

When calculating PRA burden for any particular 

collection of information, the total number of 

annual burden hours estimated is divided by the 

total number of annual responses estimated, which 

provides the average estimated annual burden per 

response. The current inventory of approved 

collections of information is maintained by the 

Office of Information and Regulatory Affairs 

(‘‘OIRA’’), a division of OMB. The total annual 

burden hours and number of responses associated 

with Regulation 14A, as updated from time to time, 

can be found at https://www.reginfo.gov/public/do/ 

PRAMain. 

326 2020 Adopting Release at 55150, n.707. 

327For purposes of the PRA, the paperwork 

burden for the information collection is to be 

allocated between internal burden hours and 

outside professional costs. The Commission’s 

estimates in the 2020 Adopting Release assumed 

that 75% of the burden of Regulation 14A would 

be borne internally by the company and 25% would 

be outside professional costs. The Commission 

recognized that the costs of retaining outside 

professionals may vary depending on the nature of 

the professional services, but for purposes of the 

PRA analysis, the Commission estimated that such 

costs would be an average of $400 per hour. This 

estimate was based on consultations with several 

registrants, law firms, and other persons who 

regularly assist registrants in preparing and filing 

reports with the Commission. See id. at 55150, 

n.708. We use these same estimates for the final 

amendments. 

PRA TABLE 1—CALCULATION OF AGGREGATE DECREASE IN BURDEN HOURS RESULTING FROM RESCISSION OF THE RULE

14a–2(b)(9)(ii) CONDITIONS AND RELATED SAFE HARBORS

Affected parties 

Proxy voting advice 

businesses Registrants 

(A) (B) 

Burden Hour Decrease .................................................................................................... 34,140 284,500 

Aggregate Decrease in Burden Hours ............................................................................ [Column Total (A)] + [Column Total (B)] = [318,640] 

3. Decrease in Annual Responses 

We believe that the final amendments 

will decrease the number of annual 

responses 325 to the existing collection 

of information for Regulation 14A. In 

the 2020 Adopting Release, the 

Commission stated that it did not expect 

registrants to file any different number 

of proxy statements as a result of the 

2020 Final Rules. The Commission did 

state, however, that it anticipated that 

the number of additional soliciting 

materials filed under 17 CFR 240.14a– 

6 may increase in proportion to the 

number of times that registrants choose 

to provide a statement in response to a 

PVAB’s proxy voting advice as 

contemplated by Rule 14a–2(b)(9)(ii)(B) 

or the safe harbor under Rule 14a– 

2(b)(9)(iv). For purposes of the PRA 

analysis in that release, the Commission 

estimated that there would be an 

additional 783 annual responses to the 

collection of information as a result of 

the 2020 Final Rules.326 Accordingly, 

we expect that the final amendments 

will decrease the number of annual 

responses to the collection of 

information for Regulation 14A by the 

same amount. 

4. Incremental Change in Compliance 

Burden for Collection of Information 

PRA Table 2 below illustrates our 

estimated incremental change to the 

total annual compliance burden for the 

Regulation 14A collection of 

information in hours and in costs 327 as 

a result of our rescission of the Rule 

14a–2(b)(9)(ii) conditions. The table sets 

forth the percentage estimates we 

typically use for the burden allocation 

for each response. 

PRA TABLE 2—DECREASE IN BURDEN HOURS RESULTING FROM THE RESCISSION OF THE RULE 14a–2(b)(9)(ii) 

CONDITIONS AND RELATED SAFE HARBORS

Number of estimated 

responses 

Total decrease in 

burden hours 

Decrease in burden 

hours per response 

Decrease in internal 

hours 

Decrease in 

professional hours 

Decrease in 

professional costs 

(A) † (B) †† (C) = (B)/(A) (D) = (B) × 0.75 (E) = (B) × 0.25 (F) = (E) × $400 

5,586 318,640 57 238,980 79,660 $31,864,000 

† This number reflects an estimated decrease of 783 annual responses to the existing Regulation 14A collection of information as a result of 

the rescission of the Rule 14a–2(b)(9)(ii) conditions. The current OMB inventory for Regulation 14A reflects 6,369 annual responses. 

†† Calculated as the sum of annual burden increases estimated for PVABs (34,140 hours) and registrants (284,500 hours). See supra PRA 

Table 1. 

††† The estimated increases in Columns (C), (D), and (E) are rounded to the nearest whole number. 

5. Program Change and Revised Burden 

Estimates 

PRA Table 3 summarizes the 

estimated change to the total annual 

compliance burden of the Regulation 

14A collection of information, in hours 

and in costs, as a result of the rescission 

of the Rule 14a–2(b)(9)(ii) conditions. 


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BURDEN AS A

RESULT OF THE

RESCISSION OF THE

RULE 14a–2(b)(9)(ii) CONDITIONS AND

RELATED

SAFE

HARBORS

Reg. 14A 

Current burden Program change Revised burden 

Current 

annual 

responses 

Current 

burden 

hours 

Current cost 

burden 

Decrease in 

responses 

Decrease in 

internal hours 

Decrease in 

professional costs 

Annual 

responses Burden hours Cost burden 

(A) (B) (C) (D)± (E)±± (F)±±± (H) = (B)¥(E) (I) = (C)¥(F) 

6,369 778,802 $103,805,312 783 238,980 $31,864,000 5,586 539,822 $71,941,312 

±See Column (A) in PRA Table 2 noting an estimated decrease of 783 annual responses to the Regulation 14A collection of information as a result of the rescission of the Rule 14a–2(b)(9)(ii) conditions. ±±See Column (D) in PRA Table 2. ±±±From Column (F) in PRA Table 2. 


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Federal Register / Vol. 87, No. 137 / Tuesday, July 19, 2022 / Rules and Regulations 43195 

328 5 U.S.C. 601 et seq. 

329See supra Sections II.A.2 and II.B.2. 

330See supra Sections II, III, and IV. 

331 5 U.S.C. 601(6). 

332See Exchange Act Rule 0–10(a) [17 CFR 240.0– 

10(a)]. 

333See Investment Company Act Rule 0–10(a) [17 

CFR 270.0–10(a)]. 

334See Advisers Act Rule 0–7(a) [17 CFR 275.0– 

7(a)]. 

335This estimate is based on staff analysis of 

issuers potentially subject to the final amendments, 

excluding co-registrants, with EDGAR filings on 

Form 10–K, or amendments thereto, filed during the 

calendar year of Jan. 1, 2021 to Dec. 31, 2021. This 

analysis is based on data from XBRL filings, 

Compustat, Ives Group Audit Analytics, and 

manual review of filings submitted to the 

Commission. 

336This estimate is derived from an analysis of 

data obtained from Morningstar Direct as well as 

data filed with the Commission (Forms N–Q and N– 

CSR) for the last quarter of 2021. 

337We based this estimate on registered 

investment adviser responses to Items 5.F. and 12 

of Form ADV. 

338See supra Section IV.A.1. 

339See supra Sections IV.B and V. 

340See supra Section V. 

341 In particular, we discuss the estimated 

benefits and costs of the final amendments on 

affected parties in Section IV.B. We also discuss the 

estimated compliance burden associated with the 

final amendments for purposes of the PRA in 

Section V. 

342See supra Section IV.C. 

VI. Final Regulatory Flexibility 

Analysis 

This Final Regulatory Flexibility 

Analysis (‘‘FRFA’’) has been prepared in 

accordance with the Regulatory 

Flexibility Act (‘‘RFA’’).328 It relates to 

the amendments to the proxy 

solicitation exemptions in Rule 14a–2(b) 

and the prohibition on false or 

misleading statements in solicitations in 

Rule 14a–9 of Regulation 14A under the 

Exchange Act. Specifically, we are 

amending Rules 14a–2 and 14a–9 to 

rescind the Rule 14a–2(b)(9)(ii) 

conditions (as well as the related safe 

harbors and exclusions set forth in 

Rules 14a–2(b)(9)(iii) through (vi)) and 

to delete Note (e) to Rule 14a–9. An 

Initial Regulatory Flexibility Analysis 

(‘‘IRFA’’) was prepared in accordance 

with the RFA and included in the 2021 

Proposing Release. 

A. Need for, and Objectives of, the Final 

Amendments 

The intent of the final amendments is 

to avoid burdens on PVABs that may 

impede and impair the timeliness and 

independence of their proxy voting 

advice and avoid misperceptions 

regarding the application of Rule 14a–9 

liability to proxy voting advice, while 

also preserving investors’ confidence in 

the integrity of such advice. We discuss 

the need for, and objectives of, these 

amendments in more detail in Sections 

I and II. We address the economic 

impact of these amendments in Sections 

IV and V. 

B. Significant Issues Raised by Public 

Comments 

In the 2021 Proposing Release, the 

Commission requested comments on the 

IRFA, including on the extent to which 

PVABs’ current internal policies and 

procedures would mitigate any costs 

imposed on PVABs’ clients as a result 

of the proposed amendments to Rule 

14a–2(b)(9). The Commission also 

requested comments on how the 2021 

Proposed Amendments may affect 

PVABs, their clients, and registrants. 

We did not receive comments on the 

IRFA or any comments that directly 

responded to the Commission’s requests 

for comments in the IRFA. However, 

several commenters generally discussed 

PVABs’ current internal policies and 

procedures and the potential impact of 

the amendments on PVABs, their 

clients, and registrants.329 In developing 

the FRFA, we considered these 

comments as well as the other 

comments on the 2021 Proposed 

Amendments.330

C. Small Entities Subject to the Final 

Amendments 

The final amendments are likely to 

affect some small entities that are either: 

(i) PVABs; or (ii) registrants conducting 

solicitations that are the subject of proxy 

voting advice. 

The RFA defines ‘‘small entity’’ to 

mean ‘‘small business,’’ ‘‘small 

organization,’’ or ‘‘small governmental 

jurisdiction.’’ 331 For purposes of the 

RFA, under our rules, an issuer of 

securities or a person, other than an 

investment company or an investment 

adviser, is a ‘‘small business’’ or ‘‘small 

organization’’ if it had total assets of $5 

million or less on the last day of its most 

recent fiscal year.332 An investment 

company, including a BDC, is 

considered to be a ‘‘small business’’ if 

it, together with other investment 

companies in the same group of related 

investment companies, has net assets of 

$50 million or less as of the end of its 

most recent fiscal year.333 An 

investment adviser generally is a small 

entity if it: (1) has assets under 

management having a total value of less 

than $25 million; (2) did not have total 

assets of $5 million or more on the last 

day of the most recent fiscal year; and 

(3) does not control, is not controlled 

by, and is not under common control 

with another investment adviser that 

has assets under management of $25 

million or more, or any person (other 

than a natural person) that had total 

assets of $5 million or more on the last 

day of its most recent fiscal year.334 We 

estimate that there are 772 issuers that 

file with the Commission, other than 

investment companies and investment 

advisers, that may be considered small 

entities.335 In addition, we estimate that, 

as of December 2021, there were 80 

registered investment companies that 

would be subject to the final 

amendments that may be considered 

small entities.336 Finally, we estimate 

that, as of December 2021, there were 

594 investment advisers that may be 

considered small entities.337 As 

discussed above, one of the three major 

PVABs in the United States—ISS—is a 

registered investment adviser.338

D. Projected Reporting, Recordkeeping, 

and Other Compliance Requirements 

Because we are rescinding the Rule 

14a–2(b)(9)(ii) conditions (as well as the 

related safe harbors and exemptions set 

forth in Rules 14a–2(b)(9)(iii) through 

(vi)) and deleting Note (e) to Rule 14a– 

9, the final amendments will not impose 

reporting, recordkeeping, or other 

compliance requirements on entities of 

any size, including small entities. To the 

contrary, the final amendments will 

alleviate the need for entities of any 

size, including small entities, to incur 

any costs needed to comply with the 

requirements of the rules that we are 

rescinding.339 For example, as discussed 

in our PRA analysis, we expect that the 

rescission of the Rule 14a–2(b)(9)(ii) 

conditions and related safe harbors will 

decrease the paperwork burdens for 

PVABs and registrants by the amounts 

that the Commission estimated that 

PVABs and registrants would incur as a 

result of these rules when adopting 

them.340 Accordingly, we believe that 

the final amendments will reduce the 

reporting, recordkeeping, and other 

compliance requirements applicable to 

small entities. 

The amendments could have other 

economic effects beyond simply 

reducing compliance requirements. We 

refer to the discussion of the final 

amendments’ economic effects on all 

affected parties, including small 

entities, in Sections IV and V.341

Consistent with that discussion, we 

anticipate that the economic benefits 

and costs likely would vary widely 

among small entities based on a number 

of factors, including the nature and 

conduct of their businesses, which 

makes it difficult to project the 

economic impact on small entities with 

precision.342

As a general matter, however, we 

recognize that any costs of the final 


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343See supra Section II.A.3. 

amendments borne by the affected 

entities could have a proportionally 

greater effect on small entities, as they 

may be less able to bear such costs 

relative to larger entities. For example, 

as discussed in Section IV.B.2, the final 

amendments to Rule 14a–2(b)(9) could 

potentially reduce the overall mix of 

information available to PVABs’ clients 

as they assess proxy voting advice and 

make determinations about how to cast 

votes. Further, as noted in Section IV.C, 

small institutions tend to rely more 

heavily on PVABs’ proxy voting advice 

than larger institutions because those 

smaller institutions have more limited 

resources to conduct their own research. 

As such, to the extent the amendments 

to Rule 14a–2(b)(9) reduce the overall 

mix of information available to PVABs’ 

clients in connection with PVABs’ 

proxy voting advice, the costs associated 

by such reduction will be borne 

disproportionately by smaller 

institutions. That said, as discussed in 

Section IV.B.2, we expect that any such 

costs imposed on PVABs’ clients would 

be mitigated to the extent that PVABs 

currently have internal policies and 

procedures aimed at enabling feedback 

from certain registrants before they issue 

proxy voting advice. 

Although we do not expect that 

PVABs or registrants will incur 

significant costs as a result of the final 

amendments, compliance with the 

amended rules may require the use of 

professional skills, including legal 

skills. 

E. Agency Action To Minimize Effect on 

Small Entities 

As noted, the purpose of the final 

amendments is to avoid burdens on 

PVABs that may impede and impair the 

timeliness and independence of their 

proxy voting advice and avoid 

misperceptions regarding the 

application of Rule 14a–9 liability to 

proxy voting advice, while also 

preserving investors’ confidence in the 

integrity of such advice. The RFA 

directs us to consider alternatives that 

would accomplish our stated objectives, 

while minimizing any significant 

adverse impact on small entities. In 

connection with the final amendments, 

we considered the following 

alternatives: 

• Establishing different compliance or 

reporting requirements that take into 

account the resources available to small 

entities; 

• Exempting small entities from all or 

part of the requirements; 

• Using performance rather than 

design standards; and 

• Clarifying, consolidating, or 

simplifying compliance and reporting 

requirements under the rules for small 

entities. 

As a primary matter, we do not expect 

that PVABs, investors, or registrants of 

any size will incur significant costs as 

a result of the deletion of Note (e) to 

Rule 14a–9. We recognize, however, that 

any costs of rescinding the Rule 14a– 

2(b)(9)(ii) conditions borne by the 

affected entities could have a 

proportionally greater effect on small 

entities as they may be less able to bear 

such costs relative to larger entities. 

While we acknowledge the potential 

costs that small entities may bear due to 

the rescission of the Rule 14a–2(b)(9)(ii) 

conditions, neither the above 

alternatives nor any other alternative to 

rescinding the conditions would be as 

effective in accomplishing our 

objectives. As discussed in more detail 

above, rescinding the Rule 14a– 

2(b)(9)(ii) conditions is appropriate 

because we believe that the potential 

informational benefits to investors of 

these conditions do not sufficiently 

justify the risks they pose to the cost, 

timeliness, and independence of proxy 

voting advice on which many investors 

rely.343 We also believe that deleting 

Note (e) is appropriate given our 

conclusion that, rather than reducing 

legal uncertainty and confusion, the 

addition of Note (e) has unnecessarily 

exacerbated it. We believe that 

rescinding these rules is the best course 

of action to address these concerns. 

Thus, the above alternatives are not 

relevant because we are rescinding rules 

that imposed requirements (i.e., the 

Rule 14a–2(b)(9)(ii) conditions) rather 

than adopting new requirements that 

could be modified to account for their 

potential impact on small entities. Our 

objectives, therefore, would not be 

served by establishing different 

compliance or reporting requirements 

for small entities, exempting small 

entities from all or part of the 

requirements, or clarifying, 

consolidating or simplifying compliance 

and reporting requirements for small 

entities. Similarly, because the final 

amendments do not set forth any 

standards, our objectives would not be 

served by establishing performance 

rather than design standards. 

Statutory Authority 

We are adopting the rule amendments 

contained in this release under the 

authority set forth in Sections 3(b), 14, 

23(a) and 36 of the Securities Exchange 

Act of 1934, as amended. 

List of Subjects 

17 CFR Part 240 

Brokers, Confidential business 

information, Fraud, Reporting and 

recordkeeping requirements, Securities. 

17 CFR Part 276 

Securities. 

Text of Rule Amendments 

In accordance with the foregoing, we 

are amending title 17, chapter II of the 

Code of Federal Regulations as follows: 

PART 240—GENERAL RULES AND 

REGULATIONS UNDER THE 

SECURITIES EXCHANGE ACT OF 1934 

■ 1. The general authority citation for 

part 240 continues to read as follows: 

Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 

77s, 77z–2, 77z–3, 77eee, 77ggg, 77nnn, 

77sss, 77ttt, 78c, 78c–3, 78c–5, 78d, 78e, 78f, 

78g, 78i, 78j, 78j–1, 78k, 78k–1, 78l, 78m, 

78n, 78n–1, 78o, 78o–4, 78o–10, 78p, 78q, 

78q–1, 78s, 78u–5, 78w, 78x, 78ll, 78mm, 

80a–20, 80a–23, 80a–29, 80a–37, 80b–3, 80b– 

4, 80b–11, 7201 et seq., and 8302; 7 U.S.C. 

2(c)(2)(E); 12 U.S.C. 5221(e)(3); 18 U.S.C. 

1350; Pub. L. 111–203, 939A, 124 Stat. 1376 

(2010); and Pub. L. 112–106, sec. 503 and 

602, 126 Stat. 326 (2012), unless otherwise 

noted. 

* * * * * 

■ 2. Amend § 240.14a–2 by revising 

paragraph (b)(9) to read as follows: 

§ 240.14a–2 Solicitations to which 

§ 240.14a–3 to § 240.14a–15 apply. 

* * * * * 

(b) * * * 

(9) Paragraphs (b)(1) and (b)(3) of this 

section shall not be available to a person 

furnishing proxy voting advice covered 

by § 240.14a–1(l)(1)(iii)(A) (‘‘proxy 

voting advice business’’) unless the 

proxy voting advice business includes 

in its proxy voting advice or in an 

electronic medium used to deliver the 

proxy voting advice prominent 

disclosure of: 

(i) Any information regarding an 

interest, transaction, or relationship of 

the proxy voting advice business (or its 

affiliates) that is material to assessing 

the objectivity of the proxy voting 

advice in light of the circumstances of 

the particular interest, transaction, or 

relationship; and 

(ii) Any policies and procedures used 

to identify, as well as the steps taken to 

address, any such material conflicts of 

interest arising from such interest, 

transaction, or relationship. 

§ 240.14a–9 [Amended] 

■ 3. Amend § 240.14a–9 by removing 

paragraph e. of the Note. 


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Federal Register / Vol. 87, No. 137 / Tuesday, July 19, 2022 / Rules and Regulations 43197 

PART 276—INTERPRETATIVE 

RELEASES RELATING TO THE 

INVESTMENT ADVISERS ACT OF 1940 

AND GENERAL RULES AND 

REGULATIONS THEREUNDER 

■ 4. The authority citation for part 276 

continues to read as follows: 

Authority: 15 U.S.C. 80b et seq. 

■ 5. Amend the table by removing the 

entry for ‘‘Supplement to Commission 

Guidance Regarding the Proxy Voting 

Responsibilities of Investment 

Advisers’’. 

By the Commission. 

Dated: July 13, 2022. 

Vanessa A. Countryman, 

Secretary. 

[FR Doc. 2022–15311 Filed 7–18–22; 8:45 am] 

BILLING CODE 8011–01–P 


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