ISS Agrees to Pay $300,000 Over Confidentiality Breach, SEC Says
Institutional Shareholder Services Inc., which helps large investors make voting choices in proxy contests, will pay $300,000 to resolve U.S. regulatory claims that it failed to safeguard confidential information.
ISS didn’t establish or enforce written policies or procedures to prevent the misuse of information by its employees, the Securities and Exchange Commission said today in an administrative order. The Rockville, Maryland-based firm also lacked sufficient controls over employee access to databases of confidential client-vote information, the SEC said.
An ISS employee from 2007 through early 2012 gave a proxy solicitor material, nonpublic information about how more than 100 clients intended to vote in exchange for meals, an airline ticket and entry to concerts and sporting events, the SEC said.
“Proxy advisers must tailor their controls based on the risks of their particular business in order to protect the integrity of the proxy voting process,” Julie Riewe, deputy chief of the SEC enforcement division’s asset management unit, said in a statement.
ISS, which settled the claims without admitting or denying wrongdoing, agreed to hire an independent compliance consultant to review its supervisory and compliance policies, the SEC said.
“From the beginning, ISS took swift action of its own and also fully cooperated with the SEC to investigate and promptly resolve this matter,” Cheryl Gustitus, an ISS spokeswoman, said in an e-mailed statement. “The confidentiality of our clients’ information is essential and is of the highest priority to us.”
Earlier this month, ISS helped lead a failed investor push to split Jamie Dimon’s dual roles as JPMorgan Chase & Co. (JPM)’s chief executive officer and chairman. The bank’s shareholders voted 32 percent in favor of naming an independent chairman, according to preliminary results released by the lender May 21, down from 40 percent a year earlier. ISS had urged its clients to back the proposal.
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