Stopping Proxy Advisor Racketeering Act

H.R. 4098, the Stopping Proxy Advisor Racketeering Act, would add a new section (Sec. 14C) to the Securities Exchange Act of 1934 to ban proxy advisory firms from providing proxy voting advice when they have certain conflicts of interest. The bill targets conflicts such as offering consulting services to registrants, altering voting recommendations based on subscription status, giving advice while simultaneously providing stewardship/engagement services to related parties, or being part of an organization that supports a shareholder-sponsored proposal related to the proxy advice. If a firm violates these rules, the Securities and Exchange Commission (SEC) could levy civil penalties in addition to existing remedies. The act defines key terms (consulting services, proxy advisory firm, proxy voting advice, registrant) and emphasizes strengthening the independence and integrity of proxy voting guidance. In short, the measure aims to curb conflicts that could influence proxy voting recommendations, enhance SEC enforcement tools, and potentially reduce the influence of conflicted proxy advice on shareholder votes.