Senate Republicans recently introduced the Investor Democracy Is Expected Act, also styled the Index Act, which would require passive investment-fund managers that own more than 1% of a public company to collect instructions from their clients on how to vote their shares. The senators are right to focus on a major problem: The three largest passive asset managers control more than $20 trillion and vote nearly one-quarter of all shares cast at corporate annual meetings to support social agendas disfavored by many Americans whose money they manage.
But as long as BlackRock , Vanguard and State Street represent the largest shareholders of America’s public companies, they will disproportionately influence the behavior of those companies, regardless of whether their clients regain the power to vote their shares.
