DUBLIN, May 17 (Reuters) - U.S. regulatory official Daniel Gallagher backed European efforts to ensure advisory firms give unbiased guidance on how to vote at shareholder meetings, saying on Friday there should be a global code of conduct.
Gallagher, a member of the Securities and Exchange Commission, said a voluntary code of the kind recommended by the European Union’s financial services watchdog ESMA in February could give reassurance on the independence of proxy advisers and the quality of their work, Gallagher said.
“Clearly this code is an idea that should be rolled out globally,” Gallagher told a corporate governance conference in Dublin.
Pension funds, insurance companies and other big institutional investors often consult proxy advisors to help them make decisions on how to vote on such matters as boardroom appointments and pay and takeovers.
Tensions between them and the firms they monitor have ramped up since the financial crisis prompted sharper criticism of corporate managements.
Gallagher said there was a risk of an “over-reliance on these (advisory firms’) opinions without full understanding of how they were arrived at and the conflicts and other issues that went into that decision making.”
“I applaud ESMA for leading the charge on it. I think it is absolutely right for (us to have) a similar ... global level code of standards, and I will ... implore the SEC to be active in encouraging that sort of project,” he added.