Proxy Advisers Can Be Fiduciaries, Benefits Regulator Says (1)

Proxy advisory firms can meet the definition of an investment fiduciary and are subject to the rules of the Employee Retirement Income Security Act, according to new Department of Labor guidance.

The Employee Benefits Security Administration outlined in a technical release that proxy advisers that either exercise authority over shares that are ERISA plan assets or provide advice for a fee to ERISA plans meet the five-part test that defines an investment fiduciary.

Under ERISA, fiduciaries must meet strict standards of prudence and loyalty to plan participants while seeking to maximize risk-adjusted financial returns.

“The Department has long recognized that ...