[Congressional Record Volume 171, Number 176 (Thursday, October 23, 2025)]
[Senate]
[Pages S7731-S7732]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. REED (for himself and Mr. Tillis):
  S. 3055. A bill to amend the Investment Advisers Act of 1940 to 
require proxy advisory firms to register as investment advisers under 
that Act, and for other purposes; to the Committee on Banking, Housing, 
and Urban Affairs.
  Mr. REED. Mr. President, today, I am joined by Senator Tillis in 
introducing the bipartisan Corporate Governance Fairness Act to ensure 
investors can continue to rely with confidence on the advice of proxy 
advisory firms by requiring the Securities and Exchange Commission, 
SEC, to regulate all major proxy advisory firms under the Investment 
Advisers Act. This advice is critical for investors as they decide how 
to vote their shares on

[[Page S7732]]

important corporate governance matters, such as director elections or 
whether to sell the company.
  Indeed, the International Brotherhood of Teamsters has stated that 
the ``independence of the research provided by proxy advisors is a 
critical element of our right, as shareholders, to hold the board of 
directors accountable and to cast informed proxy votes on corporate 
governance and proxy voting policies.'' According to the Council of 
Institutional Investors, proxy advisers ``support their clients by 
making the research gathering and analysis process more efficient to 
minimize costs for the ultimate beneficiaries, including pension 
recipients and retail investors.'' And the National Association of 
State Treasurers has emphasized the need to ``maintain the integrity 
and efficacy of the relationship between institutional investors and 
proxy advisory firms.'' In short, proxy advisory firms are an important 
tool for investors.
  But the current regulation and accountability for proxy advisory 
firms is inadequate. The purpose of the bipartisan Corporate Governance 
Fairness Act is to improve this state of affairs. Under our 
legislation, all major proxy advisory firms would be required to 
register as investment advisers under the Advisers Act. They will owe a 
fiduciary duty to their clients, and that duty will be enforceable 
under Federal law. So as to not discourage new entrants into the proxy 
advisory business, our bill provides smaller proxy advisory firms the 
choice to voluntarily register under the Investment Advisers Act but 
does not require them to do so. The legislation also directs the SEC to 
conduct periodic examinations, which must include a serious review of 
the conflicts of interest policies of registered proxy advisory firms 
and whether firms knowingly made false statements to any of its 
clients.
  Lastly, our bill requires the SEC to consult with all relevant 
stakeholders and report back periodically to the Senate Banking 
Committee and the House Financial Services Committee with 
recommendations for any additional investor protections beyond 
continued access to proxy advisory firms so that investors have the 
tools to make informed investment decisions and exercise their rights 
as shareholders. In short, the intent of this legislation is to 
preserve the critical role played by proxy advisory firms and to hold 
them accountable to investors.
  I would like to thank Senator Tillis for working with me in crafting 
this bipartisan legislation, and I urge all of our Senate colleagues to 
join us in working to pass the Corporate Governance Fairness Act.

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