Faulty Logic That Fails Shareholders
Letter to the Editor

Sir, Your editorial, "A much needed shareholder victory" (May 22), is based on a fundamental mistake. The people the Securities and Exchange Commission and you want to empower are often not "shareholders" at all. They are mere agents, not principals: the hired managers of pension funds, mutual funds, or other investment vehicles, over whom the real owners have little or no control.

Note the SEC's logical inconsistency: it wants to stop brokers from voting proxies, because they are agents, not stockholders; but then it wants to give these other agents special privileges in proxies.

All agents have agency problems. The SEC's and the FT's notions would have more substance if they were limited to individuals who actually own the shares personally and thus may truly be called shareholders.

Alex J. Pollock is a resident fellow at AEI.

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