Wednesday, 19 August 2009

FSA tackles one argument against activism

Just a quickie, but I see the FSA has written to the financial trade body collective the ISC to make clear that it sees nothing in the Walker Review's call for more shareholder engagement that is a regulatory problem. To be honest I've always thought this was a rubbish argument against activism and one that I assume some fund managers deploy to explain away a lack of activity. (A bit like the time a fund manager told me they couldn't disclose voting data publicly because it was legally impossible. They disclose now, strangely). Anyway, if that was the substance of such 'concerns' then the FSA has just shot that particular fox.

So just to be absolutely clear this is what they say:
we do not believe that our regulatory requirements prevent collective engagement by institutional shareholders designed to raise legitimate concerns on particular corporate issues, events or matters of governance with the management of investee companies.
More broadly if a fund manager doesn't want to do all this engagement stuff I don't see why they don't just say so rather than trotting out disingenuous arguments for why it's problematic. Unfortunately there are plenty of clients who aren't interested easier. And those that are bothered can take that bit of the job off you and do it themselves.

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