Critics of Corporate America say too many companies have bent the knee to U.S. President Donald Trump, paying settlements, granting public ownership or accepting new oversight. Executives argue such steps are practical and necessary in the face of Trump’s dramatic expansions of presidential powers.
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Now a revived regulatory proposal creates an experiment to show how much Wall Street will stand up for its past priorities.
Among other things, the group said in a comment letter at the time that the proposed change would hinder fund managers’ “ability to analyze company performance and make informed investment decisions.”
Perhaps industry leaders want to see a formal proposal from the SEC before taking a position. But in a social media age the early narratives matter.
Alvin Antonio Velazquez, a corporate law professor at Indiana University, told me it is more likely that companies want to avoid retaliation for speaking against the proposal and annoying Trump or his appointees.
“I’m not so sure it’s keeping their powder dry so much as a keeping-your-head-down effect here,” Velazquez told me in a telephone interview. Fund firms face pressure on a number of other fronts including a state lawsuit in Texas, supported by the administration, claiming fund firms violated antitrust law through their climate activism.
The administration also has moved against diversity initiatives, which many funds had supported, and its Republican allies are looking to force “woke” money managers out of state pension plans.
Funds might be triaging their efforts and lobbying resources, Velazquez said, giving ground on reporting frequency to defend bigger priorities.
“There’s so much to be concerned about, do they really want to take on Trump on another thing? It seems like the answer, from what they’re doing, is ‘not necessarily’,” he said.
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“It’s a really nice political narrative, but it doesn’t do anything,” Peters said of the proposed change. Large companies will continue to issue the reports since they are so closely followed by analysts. “You’re going to get a haircut if you don’t do it,” she said.
Kurt Gottschall, a former SEC regional director now at law firm Haynes Boone, said he expected some investor advocacy groups to keep opposing a shift away from quarterly reporting. The Council of Institutional Investors, which represents big public pension funds, has already done so.
But asset management firms will face a harder decision, Gottschall said. “The industry is still trying to figure out the level of traction they will get in Trump’s second term,” he said.
Reporting by Ross Kerber; Editing by David Gregorio
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Ross Kerber is U.S. Sustainable Business Correspondent for Reuters News, a beat he created to cover investors’ growing concern for environmental, social and governance (ESG) issues, and the response from executives and policymakers. Ross joined Reuters in 2009 after a decade at The Boston Globe and has written on topics including proxy voting by the largest asset managers, the corporate response to social movements like Black Lives Matter, and the backlash to ESG efforts by conservatives. He writes the weekly Reuters Sustainable Finance Newsletter.