The Council of Institutional Investors, an association of
more than 120 employee benefit funds and endowments, is
deeply troubled by parts of the Financial Choice
Act of 2017, which it says would threaten safeguards for
oversight of companies and markets.
The group raised its concerns in a letter sent May 17 to all members of the
House of Representatives, saying the bill would jeopardize
sensible reforms that investors need to hold management
and boards of public companies accountable, and that foster
trust in the integrity of the markets.
The Act, introduced in April by Rep. Jeb Hensarling,
chairman of the House Financial Services Committee, aims to end
taxpayer bailouts of banks, increase accountability from
financial regulators, and reform the Consumer Financial Protection Bureau. The
Act would repeal sections and titles of the Dodd-Frank Act that
limit or inhibit capital growth, including the
Volcker Rule, which prohibits banks from investing in hedge
funds or private equity funds.
The Act passed a Financial Services Committee vote on May 4. The House may vote as soon as the
week of May 21, according to a statement this week from CII.
The CIIs letter criticizing the bill was co-signed 53
institutional investors, including the California Public
Employees Retirement System, the New York State
Teachers Retirement System, and the Arkansas Public
Employees Retirement System.
The association said the bill would roll back curbs on
abusive pay practices at U.S. companies, and restrict the right
of shareholders to vote for directors in contested board seats.
It also said the Act would set high cost hurdles on
shareholders wishing to make a proposal for a companys
annual meeting, by requiring shareholders to own 1 percent of a
stock for three years, up from the current rule of $2,000 worth
of stock for one year.
CII fails to appreciate that the Financial Choice Act will
expand access to capital for small businesses so they can grow
and create jobs, said Sarah Rozier, spokeswoman for the
Financial Services Committee, in an emailed statement.
This will foster economic growth for all Americans,
including investors in these companies, not just those at the
top which is why the bill is supported by the Chamber of
Commerce, the National Federation of Independent Business, and
all 50 state bankers associations, Rozier said.