(Reuters) – Top Mutual Fund Manager Vanguard has paused meetings with portfolio companies, while it assesses the impact of new guidelines on investor activism of the US Securities and Exchange Commission, according to people who are familiar with the issue.
In a recent notification, the SEC, whose acting chairman was appointed by President Donald Trump, has revised the interpretations of the “useful ownership report” in ways that could lay new costs to companies such as Vanguard that now depend on the SEC scheme 13G – Form to report large companies to report large companies.
In the future, the SEC said that managers might have to use the more complex schedule 13D, which would increase their costs if they are under pressure on things like climate questions if that a company has a spread board or poison pill takeover.
Vanguard set the break in place because it “tries to process and understand the new guidelines so that they can stay a 13G filter and not a 13D filer,” said one of the sources, speaking by anonymity.
Terminating the meetings could reduce the power of shareholders activists aimed at environmental, social or board questions, say business lawyers, the apparent purpose of the current leadership of the SEC. But it can also reduce the input that managers receive from top investors on more traditional business questions such as Executive Pay.
A Vanguard representative did not respond to questions on Tuesday.
Rival asset manager BlackRock had also paused meetings with some of her portfolio companies. A business representative did not immediately comment on the status of these meetings on Tuesday.
(Reporting by Ross Kerber; editing by Leslie Adler)
