No voting policies? that will be $350,000 says SEC

The Securities and Exchange Commission has charged INTECH Investment Management LLC, a Florida based investment advisor with violating its proxy rules after it was found that it failed to describe its voting policies and procedures  as well as failing to manage and disclose a major conflict of interest.

After receiving complaints from some of the manager’s union-affiliated clients about its  pro-management proxy votes, the SEC found that INTECH had selected a third-party to vote all of its client proxies in accordance with the voting recommendations of the AFL-CIO.  At the same time, it was participating in the annual AFL-CIO Key Votes Survey which ranks investment advisers based on their adherence to the AFL-CIO recommendations on certain votes.  The SEC found that INTECH’s policies and procedures did not demonstrate how the firm would address material potential conflicts of interests and did not sufficiently describe its voting policies and procedures to clients.  In an out of court settlement, or ‘Administrative Procedure’, INTECH, and its former chief operating officer, David Hurley agreed to pay a penalties of $300,000 and $50,000 respectively. 

Commenting on the case, Daniel M. Hawke, Director of the SEC’s Philadelphia Regional Office said: “Investment advisers have enormous voting power, which can significantly affect the future value of corporate securities held by the adviser’s clients. With this power comes the duty to cast proxy votes in a manner consistent with the best interests of the adviser’s clients and not to subrogate clients’ interests to its own.”

Links

SEC Proceedings >>

SEC Final Rule Proxy Voting by Investment Managers >>

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