The American Bankers Association today urged the Department of Labor to withdraw a recent proposal that would add significant regulatory requirements regarding a fiduciary’s proxy voting activity under the Employee Retirement Income Security Act. The proposal requires that fiduciaries carry out their duties related to proxy voting prudently and solely for the economic benefit of retirement investors.
ABA raised concerns that the proposal is “over-prescriptive, needlessly creates compliance complexity and uncertainty, and increases regulatory compliance burdens and costs, thereby creating undue and unmanageable fiduciary liability and litigation risks without any tangible benefit to plans.” The association likened it to another recent DOL proposal regarding ESG investing, which it also recommended DOL withdraw on the grounds of being “unnecessary and also potentially inconsistent with ERISA and unduly burdensome to affected parties.”
ABA offered a number of recommendations for improving the proposal that would achieve the DOL’s goal of formalizing regulatory guidance on proxy voting while avoiding unintended adverse consequences for fiduciaries, plans, and retirement investors. The comment letter included input from members of ABA’s ERISA Attorneys Group and Collective Funds Task Force.