This week, we have some new developments in the conservative/Trump Admin effort to control and/or undermine shareholder power.
First, we have these new releases from the Department of Labor.
Now, I previously posted about how ERISA regulation could be used to undermine shareholder voting; these new releases come at the problem from a different angle. They hypothesize that any proxy advisor serving an ERISA-regulated plan is necessarily an ERISA fiduciary – and, as I understand it, that would potentially include proxy advisors who serve mutual funds that are included in a 401(k) menu. Notably, proxy advisors’ pivots to offering “research only” products won’t save them; the releases explain even providing research might render a proxy advisor an ERISA fiduciary.
The releases also suggest that the funds themselves included in a 401(k) menu – and the investment advisers that serve them, i.e., BlackRock and its stewardship team – are ERISA fiduciaries.
All of this would dramatically expand the regulatory ambit of ERISA, and though the administration says the implication is that these entities should only act to maximize plan wealth, what they mean is that (1) any measures pertaining to social responsibility will be treated as