BlackRock, Vanguard and Fidelity Investments are being drawn into a fight over political spending with a top SEC official rebuking the fund managers for failing to push corporations to disclose their campaign contributions.
As managers of trillions of dollars, BlackRock, Vanguard and Fidelity are among the biggest investors in almost every U.S. company. That arguably gives them unparalleled clout to influence the outcomes of shareholder elections.
SEC Commissioner Robert Jackson Jr., who holds a Democratic seat at the agency, said his office studied 15 years of data to assess how the money managers have utilized that power on hundreds of proposals targeting money in politics. He found that BlackRock, Vanguard and Fidelity have consistently opposed shareholder resolutions that would force companies to disclose how much they contribute to special-interest groups. Jackson released his findings Monday in a letter to Democratic lawmakers.
BlackRock, Vanguard and Fidelity are voting “to keep corporate political spending in the dark,” Jackson, a political independent, wrote in a Nov. 18 letter to Representative Carolyn Maloney, a New York Democrat. “For the largest institutions, there is virtually no variance by company or over time.”
Vanguard, in a statement, said political spending disclosure hasn’t “warranted intensive proxy voting and engagement efforts” when compared with issues such as cyber, climate and regulatory risks. The firm said it evaluates “matters of political spending disclosure on a case-by-case basis, and as with any type of risk, this is an area that we will continue to watch closely.”
BlackRock and Fidelity spokesmen declined to comment.
-
The firm didn't disclose its conflicts of interest in receiving over $100 million in revenue sharing from mutual funds over nearly five years, the SEC says.
August 1 -
The custodial bank says it has reimbursed the affected clients with interest.
July 3 -
Though the fees are controversial, there may not be an easy way for the industry to abandon them.
June 19
Shining more sunlight on corporate political spending has long been a goal of progressives, who’ve pushed the SEC for years to pass rules that would require such disclosures. Business groups counter that campaign contributions have little relevancy to stock prices, so it’s not information that’s material to investors’ decisions to buy or sell shares.
The SEC, under both Democratic and Republican administrations, has resisted approving regulations that would require companies to disclose campaign contributions.
Democratic lawmakers are hoping they can use legislation to force the SEC to act. Still, the odds are long because getting a bill passed probably hinges on winning the White House and Senate next year, while maintaining control of the House.
Representative Bill Foster, an Illinois Democrat, is readying legislation supported by Maloney that would require companies to disclose contributions they make to political candidates and groups. The House Financial Services Committee earlier this year released a discussion draft of the bill, which would require all companies to include that information in forms filed with the SEC.
The SEC’s Jackson, who initiated his review of fund manager voting following a request from Maloney, said Vanguard has never voted yes on a proposal that would force disclosures of political spending. BlackRock supported about 2% of such proposals, while Fidelity backed roughly 5%, according to Jackson’s office.
Although many underperformed the broader market, just over half posted double-digit gains.
"The evidence shows that, in most cases, these institutions offer little or no transparency to ordinary investors about their voting record on corporate political spending," Jackson wrote in his letter to Maloney.
Maloney, in a statement, said Jackson “raises a very important point about the disconnect between investors’ preferences on political spending disclosure, and how those investors’ votes are actually cast.”
Bloomberg News
