JPMorgan replaces proxy advisers with AI for voting US shares

[NEW YORK] JPMorgan Chase’s asset-management unit cut ties with proxy-advisory firms and plans to use artificial intelligence to assist with voting US company shares, according to a person with knowledge of the matter.

The internal AI platform, dubbed Proxy IQ, will now be used to manage votes and analyse data on more than 3,000 annual company meetings, the person said, asking not to be identified discussing information that is not public. The change was first reported by the Wall Street Journal earlier on Wednesday (Jan 7), citing an internal memo.

Firms such as Glass, Lewis & Co and Institutional Shareholder Services advise investors including state pension funds and other big asset managers on how they should vote their stock on contentious topics such as executive compensation and environmental, social and governance matters.

JPMorgan chief executive officer Jamie Dimon has used his annual letter to shareholders to blast advisers for what he said was “undue influence” on shareholder elections.

The New York-based bank has previously said it was eliminating third-party proxy adviser recommendations from its voting systems. The new move eliminates services the advisers offer to manage votes as well.

President Donald Trump last month issued an executive order seeking to limit the influence of the advisers, telling the chairman of the Securities and Exchange Commission to review regulations relating to the industry and whether they are inconsistent with the administration’s push to tone down diversity, equity and inclusion initiatives. BLOOMBERG