Pension and endowment managers on Friday called on U.S. regulators to review the rules for shareholder voting after a firm collecting ballots for JPMorgan Chase & Co cut off the bank's opponents from polling information.
The Council of Institutional Investors, which represents managers of pensions, endowments, and foundations with more than $3 trillion of assets total, said in a letter to the Securities and Exchange Commission that votes at companies' annual meetings are set up in a way that gives too much of an advantage to corporate management.
A group of investors has proposed stripping JPMorgan head Jamie Dimon of his title of chairman, leaving him only his role as chief executive. Voting on the proposal closes on Tuesday, May 21, at the bank's annual meeting in Tampa, Florida.
Earlier this week Broadridge Financial Solutions Inc, which distributes proxy communications and collects votes, stopped giving early vote tallies to the investors who have proposed the measure. The Securities Industry and Financial Markets Association, a trade group whose members include JPMorgan, asked Broadridge to stop giving the sponsors that information, said Lyell Dampeer, a senior executive at the company.
Dimon and the board, who have been campaigning to defeat the measure, continue to get updates on incoming votes, and can adjust their campaign strategy accordingly. Investors calling for an independent chairman said their campaign is at a disadvantage now that they are no longer receiving information from Broadridge.
Next week's vote has come to be seen as a referendum on Dimon and his ability to safely manage the biggest U.S. bank after its $6.2 billion "London Whale" loss derivatives trades last year.
Advisory firms Institutional Investors Services and Glass Lewis & Co separately concluded that investigations of the bank's trading losses showed the board had failed in its oversight of JPMorgan executives.
Dampeer said Broadridge took the SIFMA letter as a directive from its customers that it had to obey. Corporations pay the firm to distribute proxy materials and collect votes.
A JPMorgan spokesman declined to comment.
JPMorgan directors say that Dimon should hold both jobs. The company's profits, strong balance sheet and corrective actions after the London Whale debacle prove its current governance is working, they say.
Michael Garland, who oversees corporate governance for New York City Comptroller John Liu, one of the fund investors behind the proposal, said May 6 was the last time he learned from Broadridge how the voting was going. "It is hard to know what kind of strategy to pursue and what kind of resources to invest," Garland said.
A similar proposal last year for an independent chairman received 40 percent of the vote. It had one sponsor, the American Federation of State, County & Municipal Employees pension fund. This year AFSCME has been joined by New York City and state of Connecticut employee retirement plans and Hermes Fund Managers from the United Kingdom.
Garland and officials of other public pension funds are active members of the Council of Institutional Investors.
The Council said in its letter that the SEC should "do all in its power to put an immediate stop to this patently unfair and arbitrary change in practice." The group said that Broadridge's obligations extend to the investing public in general, not just its clients.
Dampeer said Broadridge wants the SEC to settle the issue.
An SEC spokesman declined to comment.