SEC to prohibit brokers from voting proxies

The Securities and Exchange Commission plans to eliminate an New York Stock Exchange rule that allows brokerage firms to vote the proxies of their investor clients, The Wall Street Journal reported today. Shareholder activists have long pushed to end the practice of broker voting, which occurs when clients don't cast their own votes for corporate directors, because brokerage firms typically vote the way management suggests. Under the current rule, brokers can vote client proxies on “routine” votes, which include director elections that are not contested. Few such elections are contested, according to the SEC. The controversial proposal to end broker voting has been amended several times since it was introduced in late 2006. The rule change would be effective for votes conducted at shareholder meetings held after Dec. 31, according to the proposal.