Janet Albretchsen is usually a good read. And yes, no one can really bat 100%. But Janet’s contribution to the Australian on the weekend was, how do you say, idiotic.
Essentially, what Janet was arguing for was for the regulation of speech. For certain class of people, who write and express opinions, to be regulated.
What the regulation would seek to enhance or stop, Janet did not describe. Just to stop people expressing views that she does not like.
Let’s get to the details. Janet writes:
Understandably, most people don’t follow the nooks and crannies of capitalism. Such as the fact that proxy advisory firms are the most unregulated gatekeepers in corporate Australia. And that’s the way they want it to stay. They have maintained this status by lobbying government and pretending this is a niche issue of no concern to mainstream Australians. They even resisted a self-regulatory code.
TAFKAS does follow the nooks and crannies of capitalism and guess what Janet, proxy advisors are not the most unregulated gatekeepers. There are many “unregulated gatekeeper” in Australia, but you can count journalists amongst them. AND THIS IS A BLOODY GOOD THING.
For those who read scarey diatribes, let’s just explain what proxy advisors are. They are people who read listed company documents (such as annual reports and notices of meetings) and offer commentary. They sometimes meet with company management to discuss their questions and analysis. They also make recommendations on how people should vote at company annual general meetings.
People don’t need to buy their reports. People don’t need to follow their recommendations. People don’t even need to read their recommendations.
Why do proxy advisors have power and a market. Because of the structure of the investment industry. Institutional investor trustees give management mandates to fund managers, but for whatever reason, they often separate the investment decision (what do buy and sell) from the voting decision (how to vote in meetings). This is where the proxy advisors come in.
They undertake their analysis and make voting recommendations. But, and here is the big but. There is no regulatory requirement for institutional investor trustees to:
- separate investment decisions from voting;
- outsource voting analysis to proxy advisors;
- follow the recommendations of proxy advisors;
- read the analysis of proxy advisors.
No laws. Just their view on how to best govern the millions and billions they manage.
Here’s a parallel. Journalists read government reports. Journalist meet with representatives of the government (elected or bureaucratic). Journalists write stuff. Journalist say stuff.
People are not obliged to consume the product of journalism. And journalists are not regulated, yet at least, beyond the stuff that we are all subject to including defamation.
As Janet also writes:
But as the old saying goes, sunshine is the best disinfectant. And while increasing regulation is usually misguided, sometimes care fully targeted laws can let the sunlight in.
Yeah. Sunshine is the best disinfectant. Here’s some sunshine. Janet’s argument to regulate speech is, stupid.
But perhaps Janet explain what the regulation she wants will do? And also what other speech should such regulation apply to also?