Ballot-box Stuffing on Behalf of Retail Investors

Posted in Blog at 6:47 pm

The Wall Street Journal ran a piece on Friday, October 22nd, stating and appearing to give support for a proposed rules change that proxy voting by retail shareholders should be encouraged by permitting shareholders to leave standing instructions with their brokers or custodians to vote their shares in a particular way—e.g., always in support of management recommendations, or always in support of all resolutions, rather than requiring them to return a proxy card with their decisions regarding that particular election indicated on it.  This proposition is favored by many issuers and by the U.S. Chamber of Commerce as a way to “level the playing field,” i.e., to restore the situation that prevailed before the broker vote of unvoted shares for directors was abolished, and before the proposed reforms of the proxy process come into effect.  This blatant attempt to restore ballot stuffing in behalf of incumbent boards has reminded me of nothing so much as election procedures in totalitarian states (e.g., the former Soviet Union), and I was moved to write the author of the article:

Dear Ms. Holzer:

If you agree with the U.S. Chamber of Commerce that business needs a “level playing field” to offset the ‘case-by-case approach’ of the institutions, I have another wonderful proposition for you:

    • a law that guarantees high voter turnout in U.S. elections by allowing registered voters to have ‘standing instructions’ that their vote should be automatically cast for their affiliated party’s candidate or for the incumbent official.  They could always change their standing instructions to a different set of standing instructions if they bother to, remember to, or are allowed to by the authorities (who, after all, should have the last word).

It is an absolute scandal that voter participation in U.S. elections is so low—bordering on 50%—when it is so much higher in other countries such as North Korea, Iran, or Zimbabwe.  We need to get out more voters to create a level playing field so that our elections cannot be dominated by malcontents and special-interest voters who seek to overturn the established order and create chaos throughout the legislatures and cabinet rooms of our country!

Similarly, If you agree with IBM that ISS and other third-party proxy advisors who have such tremendous influence, but no economic interest in a company should be stopped, I’m sure you would be in favor of a law preventing third parties such as the Wall Street Journal from airing their influential opinions on matters in which they have no direct interest, such as tax policy, monetary policy, and the attitudes towards private property of various foreign powers.  Just think of how much easier it would be for policy makers to operate effectively without all these noisome distractions from uninvolved parties!


Dr. Andrew Clearfield


Investment Initiatives LLC

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