BlackRock, the world’s largest asset manager, has canceled meetings with companies engaged in shareholder battles following new guidance from the U.S. Securities and Exchange Commission (SEC), the Financial Times (FT) reports. The firm, which oversees more than $11 trillion in assets, fears that continuing such discussions could breach the SEC’s recent restrictions on investor activism.
The SEC’s updated guidelines, issued last week, have been widely interpreted as a move against using environmental, social, and governance (ESG) factors in investment decisions. The regulatory shift imposes stricter disclosure requirements on fund managers when engaging with corporate leadership, effectively making it harder for firms like BlackRock to push for governance and policy changes without facing heightened scrutiny.
According to FT, the rule change particularly affects fund managers holding more than 5% of a company’s stock. Previously, they were considered passive investors and could file a simplified 13-G form when engaging with corporations on governance issues. Under the new framework, however, such engagements may require filing a more detailed 13-D form, traditionally used by activist investors seeking significant influence over corporate decision-making.
A legal expert told FT that the guidance “exploded like a grenade in the middle of pending proxy fights,” prompting BlackRock to temporarily suspend its “stewardship” meetings while evaluating the implications. The SEC’s move is part of broader regulatory efforts to curb the influence of major fund managers, whose vast holdings in U.S. companies give them considerable sway in corporate governance.
The decision to tighten regulations comes amid heightened political pressure on BlackRock. The firm has been targeted by conservative U.S. lawmakers, who argue that its emphasis on ESG considerations exerts undue influence over corporate America. The SEC’s shift also aligns with broader moves by the agency to roll back policies implemented under the Biden administration, with a Trump-appointed SEC chair awaiting Senate confirmation.
