Protecting Americans’ Retirement Savings From Politics Act

Key Points

• Financial advisors must prioritize money-making factors (like risk and return) when giving investment advice, unless a customer gives informed consent to consider non-financial goals like social or environmental causes. Advisors who do get that consent must disclose the potential financial costs of prioritizing those non-financial factors.
• Companies would only have to disclose information that a reasonable investor would consider important for making investment or voting decisions. This narrows the SEC's ability to require companies to report on topics like climate risk or social issues unless those topics directly affect the company's financial value.
• Proxy advisory firms, which tell large investors how to vote on company issues, would have to register with the SEC and prove their recommendations serve the best financial interest of shareholders. They must also disclose conflicts of interest and let companies review and respond to data used in voting recommendations before they are published.
• The bill bans 'robovoting,' which is when institutional investors automatically follow a proxy advisory firm's voting recommendations without doing their own independent review and analysis first.
• Owners of index fund shares would gain more say in how those shares are voted. For passively managed funds, investors could choose their own voting policy, or the fund would default to following the company board's recommendations, abstaining, or mirroring other shareholders' votes.
• A new Public Company Advisory Committee would be created at the SEC, made up of public company leaders and advisors, to give the agency advice on regulations, corporate governance, the proxy process, and capital formation.