Vestar purchase of ISS revives questions over proxy advisory influence
Vestar Capital Partners a private equity firm has purchased Institutional Shareholder Services from MSCI. ISS is a proxy advisory firm, providing analysis and research for institutional investors such as mutual funds and endowments as they vote on shareholder decisions.
March 20, 2014 at 03:46 AM
3 minute read
The original version of this story was published on Law.com
Vestar Capital Partners — a private equity firm — has purchased Institutional Shareholder Services from MSCI. ISS is a proxy advisory firm, providing analysis and research for institutional investors such as mutual funds and endowments as they vote on shareholder decisions. MSCI provides stock market indexes and portfolio management tools — although its purchase of ISS in 2010 has been seen as less-than-beneficial for both firms. The deal for Vestar clocks in at $364 million, but it does not come without further scrutiny from regulatory bodies.
The Washington Post writes that the debate around how proxy advisory firms such as ISS influence the decisions of shareholders has been a new focus for the Securities and Exchange Commission, as the Commission held discussions in December 2013 around how impartial the influence of the firms might actually be, and whether or not their recommendations influence institutional investors too heavily in certain directions.
At the SEC's meeting about the subject last December, Commissioner Michael S. Piwowar said: “I see many similarities between the current situation with proxy advisory firms and the pre-crisis situation with credit rating agencies, including an unhealthy over-reliance on their recommendations by investors…By requiring advisers to vote on every single matter – irrespective of whether such vote would impact the performance of investment portfolios – our previous actions may have unintentionally turned shareholding voting into a regulatory compliance issue, rather than one focused on the benefits for investors.”
Indeed, ISS and another proxy advisory firm named Glass Lewis were the two firms in focus during the SEC's debate. As the influence of proxy firms grows, so will the SEC's continued examination of their influence on shareholder votes.
Despite the debate about the influence of such entities on shareholder voting, ISS's purchase by Vestar is seen as a sensible one by other analysts. The Post quotes Peter Wahlstrom, analyst at Morningstar: “The ISS business under the MSCI umbrella didn't seem to make a lot of sense. It was not strategic…It's a good business; it's just not one that grows a lot and it doesn't have particularly high margins.”
Further reading:
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
NOT FOR REPRINT
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
You Might Like
View AllFatal Shooting of CEO Sets Off Scramble to Reassess Executive Security
5 minute readBen & Jerry’s Accuses Corporate Parent of ‘Silencing’ Support for Palestinian Rights
3 minute readShareholder Activists Poised to Pounce in 2025. Is Your Board Ready?
Regulatory Upheaval Is Coming. How Businesses Prepare and Respond Will Separate Winners and Losers
Trending Stories
Who Got The Work
Michael G. Bongiorno, Andrew Scott Dulberg and Elizabeth E. Driscoll from Wilmer Cutler Pickering Hale and Dorr have stepped in to represent Symbotic Inc., an A.I.-enabled technology platform that focuses on increasing supply chain efficiency, and other defendants in a pending shareholder derivative lawsuit. The case, filed Oct. 2 in Massachusetts District Court by the Brown Law Firm on behalf of Stephen Austen, accuses certain officers and directors of misleading investors in regard to Symbotic's potential for margin growth by failing to disclose that the company was not equipped to timely deploy its systems or manage expenses through project delays. The case, assigned to U.S. District Judge Nathaniel M. Gorton, is 1:24-cv-12522, Austen v. Cohen et al.
Who Got The Work
Edmund Polubinski and Marie Killmond of Davis Polk & Wardwell have entered appearances for data platform software development company MongoDB and other defendants in a pending shareholder derivative lawsuit. The action, filed Oct. 7 in New York Southern District Court by the Brown Law Firm, accuses the company's directors and/or officers of falsely expressing confidence in the company’s restructuring of its sales incentive plan and downplaying the severity of decreases in its upfront commitments. The case is 1:24-cv-07594, Roy v. Ittycheria et al.
Who Got The Work
Amy O. Bruchs and Kurt F. Ellison of Michael Best & Friedrich have entered appearances for Epic Systems Corp. in a pending employment discrimination lawsuit. The suit was filed Sept. 7 in Wisconsin Western District Court by Levine Eisberner LLC and Siri & Glimstad on behalf of a project manager who claims that he was wrongfully terminated after applying for a religious exemption to the defendant's COVID-19 vaccine mandate. The case, assigned to U.S. Magistrate Judge Anita Marie Boor, is 3:24-cv-00630, Secker, Nathan v. Epic Systems Corporation.
Who Got The Work
David X. Sullivan, Thomas J. Finn and Gregory A. Hall from McCarter & English have entered appearances for Sunrun Installation Services in a pending civil rights lawsuit. The complaint was filed Sept. 4 in Connecticut District Court by attorney Robert M. Berke on behalf of former employee George Edward Steins, who was arrested and charged with employing an unregistered home improvement salesperson. The complaint alleges that had Sunrun informed the Connecticut Department of Consumer Protection that the plaintiff's employment had ended in 2017 and that he no longer held Sunrun's home improvement contractor license, he would not have been hit with charges, which were dismissed in May 2024. The case, assigned to U.S. District Judge Jeffrey A. Meyer, is 3:24-cv-01423, Steins v. Sunrun, Inc. et al.
Who Got The Work
Greenberg Traurig shareholder Joshua L. Raskin has entered an appearance for boohoo.com UK Ltd. in a pending patent infringement lawsuit. The suit, filed Sept. 3 in Texas Eastern District Court by Rozier Hardt McDonough on behalf of Alto Dynamics, asserts five patents related to an online shopping platform. The case, assigned to U.S. District Judge Rodney Gilstrap, is 2:24-cv-00719, Alto Dynamics, LLC v. boohoo.com UK Limited.
Featured Firms
Law Offices of Gary Martin Hays & Associates, P.C.
(470) 294-1674
Law Offices of Mark E. Salomone
(857) 444-6468
Smith & Hassler
(713) 739-1250