 As Trevor indicated, my comments here are very brief. I'm mostly here just to introduce the panel. I will say thank you all again for coming. Proxy advisory services kind of have a rapid and very niche issue, sometimes one of the wonkier topics. So we're happy to provide what I think is a really impressive panel here today to kind of unravel the mysterious nature of it for those of you that may not be quite familiar with what the proxy advisory industry of light or why it matters to you all as a policymaker. And also for those of you who work more closely in the corporate governance space, as is also an opportunity, particularly with the question and answer space, to get a little bit more in depth about what policymakers can do to respond to the system and some more of the details about how we got where we are. So I'll introduce the speakers from my immediate left to the right. Many of you are familiar with former SEC Commissioner Daniel Gallagher, who's confirmed by the Senate as Commissioner of the SEC in October 2011 and just recently stepped down from that position. Commissioner Gallagher has had the honor and privilege of serving in the agency in several capacities throughout his professional career, first joining the commission as an intern, and later serving as counsel to Paul S. Atkins, and later Chairman Christopher Crock, working on matters involving the Division of Enforcement, Division of Trading and Markets. Commissioner Gallagher is J.D. Magnatron-Loudy from the Catholic University of America, and also graduated Georgetown University with a degree in English. Next, James Glassman served between 2007 and 2009 as the U.S. Undersecretary of State for Public Diplomacy and Affairs as Chairman of the Broadcasting Board of Governors. In April 2012, he was appointed to the Investor Advisory Committee in the U.S. Security Exchange Commission, and he has a long career as a journalist and publisher serving as President of the Atlantic Monthly Publisher of the New Republic, Executive Vice President of U.S. News and World Report, Editor and Co-Owner of Roll Call, and Moderator of two weekly public affairs television programs on CBS and one on CNN. And J.W. Verrett, on the far left, is a senior scholar at the Mercatus Center at George Mason University. From May 2013 through April 2015, many of you may have worked with J.W. other than as he was the Chief Economist here at the House of Angel Services Committee. As a member of the Mercatus Center's group, J.W. regularly briefs congressional staff, members of Congress, SEC commissioners, and other financial regulatory agencies on financial regulations topics. Assistant Professor of Law, George Mason University School of Law. His primary research interests are corporate governance and securities regulation and executive compensation. All three of these gentlemen have much longer bios I've given you in the abridged version, but we're happy to provide more information on all of their backgrounds, as well as some of the work that they've done in this field and the issues come up. So with that, I'll turn the presentation over to our panelists. They will each give a brief preparative mark section, after which I'll come back to the podium and we'll have a moderated Q&A session. So what are you thinking as they go through their comments, what you're interested in, what you'd like to hear more about? And then when I return to the podium, you can prepare for some of those questions. And I'll have some for the panelists as well. Is that it? Well, thanks. I'm going to start. I just want to thank Mercadis for the wonderful work that Mercadis does. And I had the privilege of doing two papers with Mercadis scholars with J.W. and then with Hester Pearce, who's sitting over there and who has a further honor, which is that she's been nominated as a commissioner on the FCC. So that's why she's being very quiet right now. Even though I guess this is the house and not the Senate, but still, right? News travels. So I want to provide a little bit of background and the two other panelists who are much more expert than I am on this subject will give you a lot of the details. But most Americans don't know what proxy advisory firms are. But the fact is they have more influence on corporate governance in America than any other institution. Except perhaps the SEC and I'm not even sure about that. Dan can tell us. Today enormous power over decisions about how businesses are organized, how they run, including policies on the environment, political contributions and executive pay is exercised by two firms that control by some estimates 90% of a single important market. One of those firms, ISS, controls more than half the market. The rise of these firms is a cautionary tale about the unintended consequences of regulation. So I hope we're going to be telling a story here that not only is directly about proxy advisors, but about regulation in general. So it started innocently enough when the Republican appointed chairman of the SEC, Harvey Pitt, proposed two rules whose purpose was quite limited. He was concerned that large institutions such as mutual funds and I'm going to use the term mutual funds throughout but understand there are other institutions involved here could have conflicts of interest when it came to proxy votes and proxy votes of course are voting shares that you own in this case on the behalf of the investors who are shareholders in the mutual fund itself on questions such as board membership and many others now. So the conflict comes when let's say a company like Fidelity might manage the pension funds of employees of say general electric and if a vote comes up that G's management thinks is important then Fidelity might feel like it might want to lean toward management to keep its pension contract. So that's the sort of conflict of interest that Harvey Pitt was worried about and the rule that was proposed and passed required mutual funds to declare specific guidelines for voting. It was very straightforward and it was backed by the free market members of the SEC including Paul Ackins, Dan's old boss and Cindy Glassman who may have the same last name as I do but is not related although she's a friend and Paul Ackins in fact stressed after this rule was passed that it quote did not impose a one size fits all requirement for written proxy voting procedures instead we left advisors that is to say the mutual funds and other institutions with a flexibility to craft suitable procedures well it didn't work out that way the SEC staff later interpreted the rule in such a way that led the mutual funds to assume less and not more responsibility for their votes in effect mutual funds outsourced their proxy decisions to ISS and another large firm Glass Lewis as a way of meeting the staff interpretation of the regulatory requirement and the key document which I think the other speakers will elaborate on but I just want to just introduce it anyway was a letter from the staff in response to a request from Egan Jones which is a small proxy advisory firm in May of 2004 and the staff told the firm that a mutual fund could meet its obligations by having a third party make its decisions in essence said the ruling the recommendations of a third party that is in fact independent of the mutual fund may cleanse the vote of the advisors conflict and I'm sure JW will tell you much more about that in addition mutual funds got the clear message that they had to vote on every one of the tens of thousands in some cases hundreds of thousands of proxy votes that they faced each year so here was a simple solution for the mutual funds pay the proxy advisors to tell us how to vote both the funds in the proxy firms were free from liability they seemed to be for bad choices except in the most extreme circumstance so it was a win-win for everybody except of course the companies or issuers as they're called and their shareholders and I would argue also for the US economy and the reason is that these proxy advisory firms which wield so much power make their decisions based on some vague sense of how they think businesses should be run a kind of moral sense of how businesses should conduct their business some would say that's ideological or political but it certainly is not the standard that they should make these decisions on which is increasing shareholder value and I would just point to one outrageous example which has now become quite famous of how the firms operate came when ISS recommended a no vote on re-electing Warren Buffett as a director of Coca-Cola because he had a conflict of interest. Berkshire Hathaway which is Warren Buffett's holding company owned Dairy Queen which was a customer of Coke never mind the fact that Buffett a man of great integrity I think we all would agree is probably the best investor of the last years and never mind the fact that Berkshire owned 10% of Coke and therefore had its interest closely aligned the problem was that these proxy advisory services make one size fits all kinds of decisions and just as a little bit more background the problem has been compounded as institutions like mutual funds account for more and more of total stock ownership in the United States and as the government has required companies to make proxy votes on more and more governance matters most conspicuously on executive pay the main culprit here is Dodd Frank as Stephen Bainbridge who writes a great blog and is professor of law at UCLA some of you may know him it seems fair to say that Dodd Frank did more to empower ISS than it does shareholders so I'm just going to I'm just going to wrap up here by just making a comment about economics the economy so there are studies which the JW and Dan I'm sure will talk about that examine this question of whether the recommendations of ISS and Glass Lewis actually enhance shareholder value and these studies show many of them show that they have not so if that is true then this single regulatory change with its unintended consequences is not merely concentrating power in the hands of these two firms but it's also harming the US economy so the real issue here is how can an institution make and I'm sorry let me just explain that so when shareholder value declines because advisory firms force one size fits all decisions on companies companies that are really in the best position to determine those decisions themselves who better is in a position than the Board of Directors to decide how much money a CEO should get I mean the Board of Directors wants to enhance the value of the company it's not going to overpay as a CEO or certainly not on purpose but what's happening is more and more these decisions are being made by these proxy advisory firms so when these one size fits all decisions are imposed on companies and necessarily and value declines and necessarily overall output or GDP of the nation declines and people are worse off so the real issue here is how can an institution make thousands of informed decisions on proxy matters that's a real important question and the solution however that the SEC staff is imposed is the wrong one the companies that have to pass on proxies of 30,000 or more companies literally hundreds of thousands of decisions simply shifts the problem in the wrong direction one conflict of interest is substituted for another and I'm sure that JW and Dan will talk about the conflicts of interest that these proxy advisory firms have so this problem has persisted for 11 years JW and I have offered solutions in our papers and I'm sure you're going to as Dan Gallacher as an SEC commissioner so you're going to now hear from I think JW next sorry JW next thank you very much I want to build on Jim's introduction to the proxy advisory industry and the regulation of that industry and just sort of provide a little bit go up a few thousand feet to an overview of the place of corporate voting in ISS and Glass Lewis's role in corporate voting to a broader mix of factors that help shareholders to constrain excesses by management and there's certainly plenty of excess by management that needs to be constrained by the market but I want to put shareholder voting in the context of the price system in the securities markets that helps to constrain managerial excess and I want to put it into the context of a concept called market for corporate control so first why so much emphasis in the last decade or so on shareholder voting Jim alluded to the fact that there's an increasing percentage of institutional ownership in publicly traded companies in the United States and those institutions are more active in voting than individual retail investors are and to understand why if you interview own stock think about the last time stock probably you have not taken the time to write out a proxy card but the institutional investors are more likely to particularly in the wake of the O3 regulations but there's a second reason and it's a more conflicted and a more politically motivated one and around the late 90s union investors union pension funds own a significant percentage of publicly traded shares sort of to realize that they could coordinate the broader goals of their organization in the same thinking that led Donald Trump to say in one of the first Republican debates hey when I have leverage I use it I think union pension funds understood that the leverage they obtained through their interests in publicly traded companies would allow them to press agendas that were part of the broader concern of their organizations and they did so in tandem with an increasing use of shareholder voting power by other institutional investors like state pension funds and who runs state pension funds elected officials and it tends to be that the elected officials of one party are more active in this process than others and so you can see in the agendas of these institutions a number of items that might run fairly parallel with items that would be important to disciplining managerial excess and related to financial performance but you also see a much broader set of issues that appear to me at least to be motivated by more political and more welfare ends that that are run completely counter to the shareholder wealth maximization focus of securities law 1933 and 1934 and this starts with a book called Working Capital that unions funded back in around 1999 and you can see in reference in a recent speech from Commissioner Pivovar where they laid out a number of different ideas one of them which made its way some 12 years later into the Don Frank Act the so-called CEO pay ratio voting democracy sound like great things they sound like very American things like apple pie but I would say that that analogy from democracy in the political sphere to democracy in the shareholder voting sphere is a severely constrained one what's the difference well the difference is shareholder voting is just a contractual item that shareholders are looking for in the charter of the corporation and so taking all the democratic values from the political system and trying to analogize them into the shareholder voting system has a number of unintended consequences and I think that's what we saw from the O3 rules out of the SEC much more powerful constraints I think on managerial excess would be the market for corporate control a free and open market for corporate control that I think is constrained by a law called the Williams Act in the 1960s and a more free and open market for information which is constrained I think by something called regulation FD that we can talk about I think right now the SEC which prides itself on the theory that sunshine is the best disinfectant that phrase is often repeated among securities professionals in fact in some ways inhibits natural market processes that would allow for more sunshine of malicious nefarious activity but to zero in particularly on the proxy access case those are a little bit of taste of the ideas that I think would be better I'm happy to talk to them toward the end but let me zero back in to the specifics about proxy advisors and the things that Jim was talking about one of the problems I have specifically with the guidance that tends to come out of proxy advisors and judging them not only structurally by how they're set up how their market is created by regulation which I think is a problem a letter from the department of labor issued actually the Reagan administration with the help of an assistant secretary of labor who went on to found ISS to sort of build on the market that he created by regulation is an issue I think that structural creation of a market through government regulation is a problem but I think you can also judge these institutions by the quality of the product that they put out I think a fair and apt description that Commissioner Gallagher has used and a lot of folks use is one size fits all a lot of the advice that comes out of ISS and Glass Lewis the two dominant proxy advisors is one size fits all guidance and they will certainly tell you if you have a chance to speak with them in the future that no that's not true it's not one size fits all it's uniquely tailored we tailor it to the 20,000 companies that we provide advice about our 200 people tailor it to the 20,000 companies which they must be the hardest working securities analyst and show business if they're able to do that but let me talk about a couple of specific examples where I think that's not true there are a number of items corporate governance reforms that are hotly contested in the empirical finance literature I say hotly contested it's not like WWF I mean it's you know numbers and very wonky academics fairly non-partisan academics I mean people who are publishing in Journal of Finance peer-reviewed journals and local buyers one way or the other like those of us who worked on the house might have for a political party but very hotly contested empirical questions in which I think ISS and Glass Lewis' recommendation lean only in one direction proxy access they almost universally recommend proposals to institute proxy access making it easier for shareholders many of whom are conflicted to put their nominees under the company proxy for free rather than having to pay their own way destaggering the board so some boards of directors are kind of like the senate a third of the members go up every year rather than the whole board some are like the house being the house guy I think the house model is probably pretty good but companies tend to disagree sort of 50-50 on which model works best but ISS and Glass Lewis take a pretty clear one size fits all solution that leans toward board destaggering they want all the directors up every year the empirical literature is mixed at best on this question and they mandate an annual say-on-pay vote rather than a try-annual say-on-pay vote sort of pretend advisory vote on shareholder pay that the Dodd-Frank Act requires so it allows you to choose as a board one, two, or three year terms of of revoting and the the proxy advisors say it has to be one year now there's literally no evidence suggesting any benefit to a one year annual requirement but that's the way they work another piece of the securities law architecture you have to think about when you think about proxy advisors is a system called 14A8 the 14A8 shareholder proposal process what is that well it's a process whereby currently before this rule previously shareholders could put an idea up for a vote of the other shareholders and say you know what I want to change the charter of the company I want to change the structure of the board and they could send out the shareholder voting cards to the shareholders and they could win but they had to pay for it themselves 14A8 says the company should subsidize individual shareholders putting ideas onto the company proxy and it can take a very low threshold of ownership you only have to own about $2,000 worth of the company shares to do this $2,000 worth of shares a very small percentage of the company shares so what is the quality of these proposals well a few of them are high quality but I would say the overwhelming majority of them represent the kind of quality that you see in public comments on blogs on the internet I mean think about the worst examples of comments you've seen in blogs on the internet that's the kind of stuff companies often get on their proxy statements and these are things that ISS and Glass Lewis will often provide voting recommendations about you see a second way in which an artificial market is created by the government an artificial market that this duopoly enjoys access to Jim mentioned conflicts of interest there's a very important conflict of interest in this space that I would urge your consideration of ISS the dominant player in this space provides advice to investors and says vote this way vote that way on this proposal but they do a second line business that actually represents a small percentage of the revenue I understand represents a large percentage of their profits because it's low expense business which is they'll go to companies the targets of these votes and they'll say we have some advice for you about what you should do to change your company structure now they will say the part of our operation that advises companies about how to get a better recommendation from us is separate and apart from the part of our organization that advises investors about how they should vote in these company elections and proxy contests they say that I'm sure they try but the institutional investor community has been very skeptical of conflicts of interest in a lot of other areas auditors used to do the same thing with a lot of consulting services and the pension funds and the organizations of institutional investors all said no we don't believe that they can police those conflicts conflicts prohibited by law in Sorbet and Zoxley when these conflicts became apparent with respect to investment analysts the institutional investor community said we don't trust them we need some clear rules out of an AG settlement to police these conflicts but here where institutional investors and the union pension funds in that community see and recognize a clear conflict of interest with their ally their position is we don't really see that as a problem I think that inconsistency points to to further examination of those conflicts of interest I think they're very serious and I wouldn't be as concerned about them if the market for these services wasn't created by regulation but the fact is that it is in the Avon letter and in the 14A process I want to talk real quick about the guidance that Commissioner Gallagher was such an ardent fighter for I mean I think when Jim when we did our first paper on proxy advisors and the problems in that space I would have thought it was a you know it was a quixotic quest we weren't going to get anywhere I just thought it's be fun to write a paper with Jim Glassman so I'll do that and it turned out I mean because of Commissioner Gallagher's work we got guidance out of the SEC that took a big hit in the right direction and so I want to commend that I think that's terrific some particular things out of that guidance the SEC did and I think the house I want to credit the House Financial Services Committee too Chairman Garrett did a lot of work in oversight of this issue first the guidance says that companies can conduct sampling to make sure that there there's compliance with the prior rules from O3 I think that's good that's certainly the lower cost for institutional investors and sampling methodology so well accepted in you know econometrics there's a recognition in that guidance of the right of mutual funds to decide to just vote with management if they feel like there are no red flags indicating a problem I think that was very important and we mentioned that Jim and I mentioned that in our papers I'm glad that made its way into the SEC's guidance and there's some requirements about disclosure of the conflict of interest that Jim and I were talking about I think that's all terrific that's all to the good concerns I have about how we just haven't gone far enough first of all it's staff level guidance I'd feel a lot better if it was an SEC level commission level interpretive release I'd feel even better if it was statutory but I'd prefer it to be at least an interpretive release at the full commission level I'm concerned about the fact that it only applies to entities regulated by the SEC and not those regulated by the Department of Labor I'm concerned about the fact that the Avon letter is still out there requiring ERISA fiduciaries to vote even if it doesn't make sense to them for them to vote and I'm concerned about the 14A8 process that creates this artificial market a few other concerns and ideas about things we should do again the Williams Act and Reg FD and 14A8 are all problems I'd like to see some specific recognition that the Egan Jones letter is no longer a good law I would have hoped I've seen that in the guidance it didn't make its way in there let me just stop there turn it over to Commissioner Gallagher and looking forward to talking to all of you in the Q&A former Commissioner Gallagher I meant to note never to follow Professor Barrett and all again I'm sorry how ineligible I am or how at the point you are I'm suffering a little cold here so I'm going to try to get it short it's a real honor first of all to be here thanks to Mercatus for inviting me thanks for you guys showing up this is a really important issue and I wanted to pivot off the first two sets of remarks to kind of figure how I would add value here the value I can add for you is to explain to you why you need to care about this issue because it really does sound so picky and so discreet compared to all of the other things that you have to deal with in your day-to-day job than your bosses have to deal with and I will tell you coming into the SEC in November of 2011 right a year or so after Dodd-Frank the last thing in the world I thought I would be focusing on in fact I didn't even know what a proxy advisory firm was when I came back as a commissioner so to think that I would come in and need to focus so much of my attention and time and energies on this issue really was surprising to me and let me tell you why this is the same conversation I'll tell you about a little conversation I had with the CEO of one of the proxy advisory firms after about three or four speeches I gave on the same subject and most of you who read or followed my speeches over my four year term know that I rarely ever gave the same speech or talked about the same issue twice and there are a couple exceptions one of them being proxy advisory firms and that prompted the CEO to ask for a meeting with me come in very polite but he started the meeting by asking me why in the world can I ask you are you so intensely focused on this issue and my response to him was because because I've gotten more complaints about you and your industry as an SEC commissioner than anything else since I've walked in this door and that is really think about it post Dodd Frank post financial crisis the stream of complaints I was getting from the issuer community from the advisor community from trade groups I had CEOs fly in to Washington to meet with me one on one after they saw my remarks in this space it was an open and obvious issue for the commission to address I still believe it's an open and obvious issue for you and your bosses to address I don't believe despite some of the politics that surround this issue given some of the voting recommendations and as professor Varret mentioned how partisan sometimes they may seem to the other party I don't think this is a partisan issue this is about good government this is about an industry that was as professor Varret said created by regulation if you go back to the Avalon letter of 88 which said if you advise on Orissa assets you have to vote so every vote you have to to be consistent with your fiduciary duty that was a big deal that was a shot heard around the world and in 2003 when the SEC came out and talked about it was a really simple rule and I think commissioner Atkins got it right in his remarks at the time on its face was a free market solution have policies and procedures to deal with the conflict surrounding voting but a lot of folks in this community especially the proxy advisory firms who wanted it to be so thought this was the SEC's version of the Avalon letter now the SEC is mandating that you vote and that was actually incorrect that was one of the main issues we took on in SLB 20 which is the guidance that came out of June last year from the staff that professor Varret mentioned and so this notion coming from Avalon put into the 2003 rule that you need to vote every vote every share was huge but also within that rule text itself putting aside the no action letters that were mentioned to ISS and Egan Jones the rule text itself said if there is a conflict the advisor can prove to the SEC that the vote was un-conflicted by the use of an independent third party that magic language is actually in the rule so when we had our own proxy advisory round table in December of 2013 there was a healthy amount of debate about whether the no action letters were the original sin or the rule the truth is it doesn't really matter you had a rule that basically implied the use of an independent third party would cleanse you of a conflict that otherwise would put you in really deep trouble both under Orissa I would say and the federal securities laws and then you followed it with two new action letters one to ISS itself saying don't worry if you use a proxy advisory firm that is the independent third party we were talking about if you have a conflict as an advisor this is going to cleanse your hands I think is the phrase they used and then a second letter to Sean Egan's firm Egan Jones saying oh yeah and if you're the proxy advisory firm and you're providing advice and you're also if you have ancillary business lines right so if you actually do corporate consulting work for the issuer that you're rating and that advisors are relying on your recommendation for that's not a conflict horrifying horrifying right so that's 2003 and 2004 2006 you have the SEC compensation rules come out which of course brings up a whole lot more data and votes for the advisors you have Dodd-Frank with say on pay say on frequency you have as Professor Varrette said the 14-a-8 process which by the way I just issued a paper at WLF saying the SEC should get out of the business of running 14-a-8 and I mean it sincerely all of these numbers the number of votes is going up dramatically a thousand plus percent in the last 10-15 years using rough numbers and you know at the same time the proxy advisory firms have become more and more entrenched the numbers are up the number of retail investors are down these advisors need to rely on somebody to do some of the work unless of course they can do it themselves and that's why we needed in 2014 a staff legal bulletin 20 and that's why for years four years I focused intently on this proxy advisory firm issue it goes to the very core of corporate governance in the United States which is unfortunate in many ways because as you guys all know those of you who went to law school if not you know corporate governance is a creature of state law in the United States it's not a federal system nor should it be but the use of these rules that I just mentioned Professor Varrette mentioned plus the role of the proxy advisory firms means that the federal government has gotten further and further entrenched into corporate governance and of course the proxy advisory firm being the key component of this new structure is completely unregulated right now I'm not one for needless regulation but when I look at the analogy the main analogy between the proxy advisory firm and the credit rating agencies the credit rating agencies had exactly the same privileged perch within the federal securities laws as the proxy advisory firms they basically were inserted by legislation by rule into so many places the NRSRO the nationally recognized statistical rating organization that their opinions became the law and that didn't work out so well in 2008 Congress though in 2006 some people forget actually had a very bipartisan statute the credit rating agency reform act of 2006 to get at this very issue they said we can't have in the case of credit rating agencies three firms controlling 98% of the market they're not registered they're not examined they have conflicts they're all these problems and they have this privileged perch so let's get at it by requiring them to register prohibiting conflicts mandating disclosure of conflicts it was actually in many ways a very light-touch piece of legislation but very intrusive into the rating agency industry so there Congress took note I'll point out to you of a very similar issue and acted now in Dodd-Frank of course in Title IX the Congress acted a whole lot more with respect to rating agencies and we could debate that separately I think a lot of that stuff was silly but here you have the same thing you have two firms controlling 90 plus percent of the industry they can control it because they've been baked in through SEC rules through the Avon letter through these no action letters the staff guidance that came out in 2014 first I'll point out I totally agree that it should have been commission level or even statutory would be great I will also caution you though in this day and age sometimes staff guidance is better than commission guidance beware what you ask for having lost 16, 3, 2 votes in 4 years at the commission you might not want that 3, 2 vote for proxy advisor guidance that's fair enough that would be fine with me but the staff guidance was as good as we could get it took and I'll be totally candid with you guys I took my entire focus in 2014 it took me telling the chairman of the SEC that this was one of two issues this and reg a under the jobs act that were important to me in the year of 2014 and I think she got it there was no running and no hiding on this issue we were going to have to do something and I appreciate that she did prioritize it and I appreciate the substance that came out as I said in my WLF paper on this very topic though I'm not convinced that SLB 20 is the answer I think there's some really important things that were done in the staff guidance you know clarifying that you don't have to vote every vote every share that you can prearrange with your clients clarifying that these conflicts that proxy advisory firms have have to be disclosed hugely important and I think it'll take a little bit of time for the changes under this staff guidance to take control but I don't think that means that you here can just forget about this issue I think it's an issue of national priority to this day if I were you I'd want to know from the SEC how did the guidance work what are they finding the office of compliance inspections and examinations at the SEC put out a notice this year saying they were going to examine investment advisors for how they're using this guidance SLB 20 because the advisors were put on notice you're a fiduciary you can't remotely rely you have to do more than rely on ISS or Glass Lewis so the examiners are going to be in there looking to see what is being done and if you're a smaller medium size advisor I have to tell you at some point you've got to weigh the costs and benefits you're running a little index fund who really cares about the votes my clients don't care about the vote why don't I just put in my prospectus a notice to them that says I'm just going to vote with management if you come and invest in my fund we're voting with management you have some sort of inclination in another direction why don't you just say we're voting with cowpers right pick whatever you want you can even say you're not going to vote and I don't think a lot of people would do that because there's been so much made about the fiduciary duty for voting but I think as a small medium size advisor that's eventually going to have to be the way it works because they're facing otherwise a breach of their fiduciary duty that's been made clear by the staff guidance and so it might take some time but I think policymakers here more than the SEC should be inclined right now to continue to be vigilant on this and determine is it time to think again potentially about a statute like the credit agency reform act of 2006 with that I'll turn it back I guess for some questions thanks