The US securities watchdog moved to prevent asset managers from working together to influence corporate policy, after investigating BlackRock, Vanguard and State Street’s role in the ousting of ExxonMobil directors in 2021.
The Securities and Exchange Commission stopped short of bringing an enforcement action against any asset managers but warned it “has serious concerns about the conduct” of some fund managers that participated in the Climate Action 100+ coalition (CA100+). It said asset managers should be wary of similar efforts in the future or risk becoming subject to stricter rules that apply to activist investors.
The move is the latest effort by the Trump administration and SEC chair Paul Atkins to dilute shareholder influence over publicly traded companies, including weakening the influence of proxy advisers and large passive managers such as BlackRock and Vanguard.
At the same time, Atkins has sought to ease reporting requirements for companies, including rules that would decrease the frequency of financial results to semi-annual from quarterly.
Last month, the SEC proposed eliminating its oversight of shareholder proposals, shifting power to states to oversee investor recommendations to boards of directors.
Republican and business groups have had the big three fund managers in their sights ever since they voted with activist hedge fund Engine No. 1 to replace three board seats at a shareholder meeting of the oil company. All three investment groups have left or cut back their participation in climate groups in recent years after being investigated or blackballed by Republican-controlled state governments that objected to the use of environmental, social and governance (ESG) factors in investing.
The SEC opened its probe last year, after Donald Trump won the presidency and changed the commission’s leadership. It sought to determine whether asset managers, including BlackRock and State Street’s investment management arm — both of which were members of CA100+ - and Vanguard were forming “groups” and co-ordinating their votes.
That matters because passive investors are subject to much lighter regulation than activists who work together to take over or influence companies. In particular, they use a short version of the 13G form to report their holdings, rather than the more onerous 13D.
In 2025, the SEC sought to push asset managers that engaged with companies on environmental and social matters to file on the 13D form, initially prompting some funds to scale back meetings with companies. Last month the SEC clarified that routine engagement with companies would not trigger the 2025 guidance.
In the Exxon case, “It appears to us the players on the field came very close to not being passive — instead of being eligible to report their shares on 13G,” an SEC official said. Exxon did not immediately respond to a request for comment.
He added that the commission opted not to spend more time investigating and instead issued the report ahead of preparations for the 2027 proxy season, when many large public companies hold annual meetings and shareholder votes take place.
The official described Wednesday’s report, which “encapsulates our findings after one year”, as “instructional guidance to the marketplace”.
BlackRock and State Street declined to comment. Vanguard did not immediately respond to requests for comment.
Michael Boudett, general counsel of Ceres, which helps manage the CA100+ coalition, said “Climate Action 100+ has always operated within US securities law. It supports investors as they assess and address the financial risks that climate poses to the companies they invest in. It is up to every participating Climate Action 100+ investor to make their own decisions, including how they vote their shares.”
Exxon and other corporations have claimed social activists with tiny share stakes hijacked the proposal process to pursue agendas that had little bearing on shareholder value.
“It’s rather ironic that this SEC is proposing to rescind the shareholder proposal rule on the ground that corporate governance should be left to the states, while simultaneously invoking bureaucratic red tape at the federal level,” said Ann Lipton, a professor of law at the University of Colorado.
Lipton said 13D disclosure would require large asset managers to disclose every trade they made in a company’s shares over 60 days, a burden for firms with several funds frequently transacting in the market.
“Applying the activist rules to their conduct provides no additional information to the public; it merely uses the threat of paperwork to inhibit shareholder engagements,” Lipton said.