"The American people deserve the opportunity to vote on behalf of their investments, including those made in index funds," Mr. Sullivan said in a news release. "Massive Wall Street firms should not be able to co-opt this voting power to essentially control our entire public market."
Mr. Sullivan's accompanying fact sheet highlights the "Big 3" money managers — BlackRock, which had $9.6 trillion in assets under management; Vanguard Group, which had $8.1 trillion in AUM; and State Street Global Advisors, which had $4 trillion in AUM, all as of March 31.
"Currently, the three largest investment advisers vote nearly one-quarter of all shares cast at annual meetings and are the largest shareholders in over 90% of S&P 500 companies," Mr. Sullivan said in the news release. "The INDEX Act would correct this extreme market distortion by simply requiring that the power to vote shares resides with the fund investors, not the advisers."
In a statement, a Vanguard spokeswoman said the firm is reviewing Mr. Sullivan's bill and added that "Vanguard believes it is important to give investors more of a choice in how their proxies are voted and we are committed to working with clients, policymakers and others to help ensure long-term investor voices are heard.
A BlackRock spokesman said in a statement that the firm is "proud to be leading the industry in offering clients a range of options to direct how their proxy votes are cast" and mentioned BlackRock's Voting Choice initiative, which is available to institutional clients with over $2 trillion of index equity assets, including public pension funds serving more than 60 million people.
"For those clients who choose BlackRock for proxy voting, BlackRock will continue to employ its fiduciary responsibility to vote in the long-term economic interest of those clients," the spokesman said. "We look forward to working with members of Congress and others on ways to help every investor — including individual investors — participate in proxy voting if they choose."
A State Street representative did not immediately respond to a request for comment.
The INDEX Act is co-sponsored by Republican senators Pat Toomey of Pennsylvania, Mike Crapo of Idaho, Chuck Grassley of Iowa, John Cornyn of Texas, Kevin Cramer of North Dakota, Bill Hagerty of Tennessee, Marco Rubio of Florida, Thom Tillis of North Carolina, Steve Daines of Montana, Cynthia Lummis of Wyoming, John Kennedy of Louisiana and Rick Scott of Florida.
With no Democratic co-sponsors, the bill is unlikely to move in the Senate.