JPMorgan’s asset management arm to end use of proxy advisers in US, memo shows

Jan 7 (Reuters) – JPMorgan Chase‘s asset management division no longer plans to use proxy advisers in the U.S., according to an internal memo seen by Reuters on Wednesday, a move the bank described as an industry first.

Conservatives and some business leaders have for years leveled complaints about proxy advisers and large fund managers, arguing that they often recommend votes against boardroom decisions or directors and place too much emphasis on climate and social issues.

Proxy advisory firms review shareholder proposals and corporate governance issues and provide voting recommendations to institutional investors ahead of annual shareholder meetings.

JPMorgan Chase said in the memo it no longer needs third-party data collection or voting recommendations in the country. It plans to rely on a newly launched AI-powered in-house tool, called Proxy IQ, which aggregates and analyzes proprietary data from more than 3,000 annual company meetings.

Proxy firms Glass Lewis and ISS did not immediately respond to Reuters’ requests for comment on JPMorgan’s move. The news was first reported by the Wall Street Journal earlier on Wednesday.

The shift comes as the industry continues to face criticism from U.S. President Donald Trump and prominent corporate executives over the influence of proxy advisers’ recommendations, as their guidance remains widely used by institutional investors.

In December, Trump signed an executive order aimed at increasing oversight of the proxy advisory industry, on the grounds that top firms often “advance and prioritize radical politically-motivated agendas.”

JPMorgan’s long-time CEO Jamie Dimon and Tesla chief Elon Musk have been among the most outspoken critics of the proxy advisory industry in corporate America.

Corporate governance analysts and attorneys have, however, said the White House order could weaken shareholder rights, while Glass Lewis and ISS have repeatedly denied any wrongdoing.

(Reporting by Manya Saini in Bengaluru; Editing by Shinjini Ganguli)