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BlackRock canceled the mid-term meeting with the company for fear of releasing last week’s SEC guidance on investor activism released last week.
Blackrock and other asset managers often talk to companies about voting before activist movements at annual shareholder meetings and regular proxy voting.
However, the US Securities and Exchange Commission (SEC) guidance has raised questions about this practice, which is widely interpreted as an attack on the use of environmental, social and governance (ESG) investment factors. This change imposes more heavy regulatory requirements on fund managers who may be seeking to influence company behavior.
“This guide exploded like a grenade in the agent fight that was to be decided last week,” said Kai Liekefett, partner at Sidley.
BlackRock, the world’s largest asset manager, temporarily suspended the “management” meeting to evaluate the implications of the SEC rule changes, a person familiar with the matter said.
The SEC’s move is part of a larger regulatory effort by state and federal officials to curb the power of the largest fund managers, who hold 10% of most U.S. companies because their index tracks the size of funds.
Until February 11, the SEC said fund managers who own more than 5% of companies held more than 5% of companies’ corporate behavior when promoting businesses on issues ranging from executive compensation to environmental policy. Therefore, they are allowed to submit a form regarding their relatively short holdings, called 13-g, which only applies to “passive investors”.
Under the new rules, the standards that will trigger heavier 13D archives have been expanded. Traditionally, 13-D files are largely reserved for active investors, such as hedge funds or investment managers who want to influence controls.
The guide complicates the common practices of large fund managers to urge companies to disclose climate risks, diversify boards and take other measures in the interests of long-term shareholders.
While some of these issues are closely related to the American cultural war, these rules also undermine efforts to eliminate corporate poison programs and other conventional corporate governance matters that are not related to environmental and social issues.
Form 13-D requires details on how and how an investor acquires his shares and his investment purposes. Aggressive investors also face stricter deadlines to file SEC’s stock purchase or sales updates.
A lawyer who advised large managers said that while “this is an anti-ESG change”, its ripple effect will span the investment industry. “This practical effect will make it more difficult to participate in the ESG topic, and it will put more pressure on managers when they think about how they are directly and informally involved.”
BlackRock owns more than 11 tons of asset management assets, and given that almost all of the large U.S. corporations have huge holdings, the impact of U.S. lawmakers on U.S. lawmakers bear their impact on U.S. companies. The impact of huge pressure.
The SEC changes were carried out in a series of actions by the agency to stay away from Biden’s administration’s policies. They were adopted when President Donald Trump’s SEC president nominee Paul Atkins awaited Senate confirmation.
Blackrock and the SEC declined to comment. It is unclear whether BlackRock’s biggest rivals, Vanguard and State Street, also canceled the meeting.
Stefania Palma contributes reports from Washington
