JPMorgan Chase’s asset-management arm has ended its relationship with proxy advisory firms, moving to oversee shareholder voting internally with AI technology, reported the Wall Street Journal.
The decision applies immediately and comes as regulatory scrutiny increases around the proxy advisory sector.
Managing assets exceeding $7tn, JPMorgan’s asset-management business must cast votes on behalf of clients at thousands of shareholder meetings annually.
This proxy season, the unit will deploy an internally developed AI platform known as Proxy IQ to help manage and analyse voting at US companies, the news publication added.
According to an internal memo viewed by The Wall Street Journal, Proxy IQ will handle vote management and analysis of data from more than 3,000 annual meetings, producing recommendations for portfolio managers.
The memo states JPMorgan is the first major investment firm to completely eliminate its use of outside proxy advisers, which typically provide research and logistical support for voting decisions.
The firm had previously indicated it would discontinue using such advisers for recommendations but now intends to rely solely on its internal stewardship team and technology.
Proxy advisory firms such as Institutional Shareholder Services (ISS) and Glass Lewis assists investment institutions with the complexities of proxy voting.
In December, a Trump administration executive order called for a regulatory review of proxy adviser practices.
JPMorgan CEO Jamie Dimon has been critical of the industry, describing proxy advisers as “incompetent” in comments made at an industry event last year, the report said.
Following regulatory developments, ISS stated last month that it does not determine corporate governance standards and that clients retain full discretion over their decisions.
Glass Lewis also recently announced plans to stop offering widely distributed benchmark recommendations by 2027, instead focusing on providing tailored advice to individual clients.
“JPMorgan abandons proxy advisers and turns to AI ” was originally created and published by Private Banker International, a GlobalData owned brand.
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