The SEC on Thursday settled with Institutional Shareholder Services on charges “for failing to safeguard the confidential proxy voting information of clients participating in a number of significant proxy contests,” according to an SEC statement.
Without admitting or denying the findings, ISS, which is registered with the Securities and Exchange Commission as an investment adviser, agreed to settle the charges by paying $300,000 to the U.S. Treasury and retaining an independent compliance consultant, an SEC administrative order implementing the settlement proceedings said.
In a separate statement, ISS, a subsidiary of MSCI Inc., said, “From the beginning, ISS took swift action of its own and also fully cooperated with the SEC to investigate and promptly resolve this matter. The confidentiality of our clients’ information is essential and is of the highest priority to us at ISS. We now consider this matter closed.”
The alleged breach against the Investment Advisers Act of 1940 occurred from approximately 2007 to early 2012, according to the order.
The ISS employee provided a proxy solicitor information on how more than 100 ISS institutional clients were voting their proxy ballots, the order alleged.
The “proxy solicitor purchased approximately $11,500 in sporting event and concert tickets for the ISS employee,” the order alleged. The solicitor also “sought reimbursement from the proxy solicitor firm for approximately $20,000 in meals with the ISS employee and his family” and meals with other ISS employees.
“According to ISS employees who attended the meals, there was never a business purpose for the meals, and the fact that the proxy solicitor firm was entertaining ISS’ account managers with meals was known to certain ISS managers, some of whom attended the meals.”
The SEC didn’t identify any ISS employees or the proxy solicitor or the solicitor’s firm or the proxy contents.
Florence E. Harmon, SEC spokeswoman, said SEC officials won’t comment on whether any ISS employee or the proxy solicitor or the solicitor firm is under investigation.