According to the New York Post (Advisory firm employee leaking shareholder voting data, whistleblower claims, a “whistle-blower” complaint has been lodged with the SEC against a midlevel employee in ISS’s Boston office who “has been using his access to shareholders’ voting data to obtain cash and gifts from so-called proxy solicitation firms.”
Sharing the votes ahead of time allows companies worried about a controversial proposal, such as a merger or a stock plan, to better game the outcome by homing in on those who have not yet voted or who voted against management.
Of course, it is too bad that someone at ISS may be violating contracts and leaking information. On the other hand, only about 5% of shareowners who receive their proxies electronically bother to vote. Perhaps this news will help investors realize their votes actually have value. Additionally, the problem would be less of an issue if more institutional investors chose to announce their votes publicly, like some do through ProxyDemocracy.org and MoxyVote.com.