Statement of Bartlett Naylor, Financial Policy Advocate, Public Citizen
Note: The U.S. Department of Labor on Monday issued a proposed rule that would allow major investment funds governed by the Employee Retirement Income Security Act to avoid shareholder votes if the outcome of the vote would not change the basic value of the company. The proposal marks a major departure from the Avon Letter, a 1988 directive by the Department of Labor during the George H.W. Bush administration, emphasizing the importance of voting by institutional stakeholders such as mutual funds. The Avon letter is credited with spurring shareholder activism and greater corporate accountability. The newly proposed rule is open for comment for 30 days, a relatively brief period given the momentous nature of the change.
Trump’s minions continue to tear at the already tissue thin lines of corporate accountability. Allowing mutual funds to pass on shareholder resolutions will set back grassroots investor efforts to confront climate change, political spending corruption, human capital degradation and more. This proposed rule must be withdrawn.