SEC Gives Green Light for AI-Assisted Proxy Voting — A Quiet But Big Shift for Wall Street
In a development that could reshape how trillions in shareholder votes are cast, a senior U.S. Securities and Exchange Commission official has signaled a more permissive stance on the use of artificial intelligence by investment advisers when making proxy voting decisions. (Bloomberg Law)
Until now, the question of whether advisers could leverage AI — including large language models and sophisticated agentic systems — to sift through complex proxy materials and guide voting on corporate proposals has hovered in regulatory limbo. This week, Brian Daly, director of the SEC’s Division of Investment Management, offered clarity: advisers can use AI tools to help analyze proxy ballots and support their decisions, provided human judgment remains central to the final vote. (Bloomberg Law)
This is more than a procedural footnote. Proxy votes on issues like board elections, executive pay and environmental or social policy often determine a company’s strategic direction. With investment advisers managing upwards of $19 trillion in client assets and casting proxies on behalf of millions of shareholders, the ability to deploy AI could drastically speed up — and potentially standardize — how these decisions are made. (SEC)
But the shift also raises questions about accountability and transparency. AI models can triage dense disclosure documents, summarize governance proposals and flag conflicts — tasks that would take humans far longer to complete. Yet, critics warn that over-reliance on opaque algorithms could erode fiduciary care unless advisers maintain clear policies for oversight and auditing. (Reddit)
This regulatory signal comes at a moment when the proxy ecosystem itself is under scrutiny. Major players like JPMorgan Asset Management have recently announced plans to scrap traditional proxy advisors in favor of in-house AI tools — a move that reflects wider industry shifts toward bespoke, data-driven governance analysis. (Barron’s)
What this means going forward: The SEC isn’t issuing new binding rules yet, but its tone suggests greater comfort with AI as a tool, not a replacement for human stewardship. Advisers contemplating AI integration will need well-documented proxy voting policies, transparency with clients, and robust safeguards to ensure fiduciary duties are upheld. (Bloomberg Law)
Glossary
Proxy Vote – A ballot cast on behalf of a shareholder by an investment adviser or other representative, usually on matters like director elections, compensation plans, or corporate governance proposals.
Fiduciary Duty – A legal obligation requiring advisers to act in the best interests of their clients, including thoughtful and unbiased proxy voting.
Large Language Model (LLM) – An advanced AI system trained on massive text datasets (e.g., GPT-class models) capable of summarizing documents, answering questions, and providing insights.
Agentic AI – AI systems that can perform autonomous tasks, such as interacting with multiple data sources and executing workflow steps with limited human input.
Source: https://www.techinasia.com/news/sec-investment-advisers-ai-proxy-votes
