CalSTRS Takes Oppose Position on Financial CHOICE Act
CalSTRS expresses concern about H.R. 10 bill provisions that could reduce SEC oversight and remove critically important investor protections
WEST SACRAMENTO, Calif. – CalSTRS Chief Executive Officer Jack Ehnes issued the following statement reflecting the Teachers’ Retirement Board’s decision to oppose H.R. 10 (Hensarling, R-TX), also known as the Financial CHOICE Act of 2017:
“The Financial CHOICE Act is shrouded in rhetoric about fixing the United States economy and lifting the regulatory burden on our financial institutions. On the contrary, this bill actually aims to unwind important shareholder rights, allows for riskier public companies, and decimates the Securities and Exchange Commission’s ability to protect investors.
“The impacts of the Financial CHOICE Act are detrimental to our mission, dating back to 1913 when CalSTRS was established.”
CalSTRS Chief Executive Officer
“CalSTRS is a long-term investor with over $206 billion in assets invested on behalf of and to secure the retirement future for more than 914,000 California educators and their beneficiaries. The impacts of the Financial CHOICE Act are detrimental to our mission, dating back to 1913 when CalSTRS was established. In fact, several of the Act’s provisions have the potential to significantly affect our rights as shareowners and our ability to carry out our fiduciary duty by increasing the hurdle for filing shareholder proposals and weakening private equity disclosure requirements.
“This is not the first time we’re speaking out to raise awareness of the issues with this legislation. On April 25, we sent a letter to California Congresswoman Maxine Waters, ranking member of the House Committee on Financial Services, regarding our stance on the bill’s provisions that go beyond financial regulation. And on June 5—in advance of the full House vote—we sent a follow-up letter to all 55 California members of the United States Congress reiterating our concerns.
“The CHOICE Act dramatically changes the shareholder proposal process thus effectively preventing investors, like CalSTRS, from participating as an active shareowner.”
CalSTRS Chief Executive Officer
“The CHOICE Act dramatically changes the shareholder proposal process thus effectively preventing investors, like CalSTRS, from participating as an active shareowner. We take our fiduciary responsibility seriously, and as such, CalSTRS actively participates in filing proposals for the betterment of companies in our portfolio, with over 300 proposals filed in just the past five years. If passed, this provision would have a chilling impact on company/shareholder relations.
“The CHOICE Act also looks to roll back critically important Dodd-Frank investor protections in private equity funds. These protections provide SEC oversight and require transparency in the form of registration and certain types of reporting from these fund advisers. CalSTRS invests nearly $16.6 billion (as of April 30, 2017) in private equity investments and has been a leader in fee transparency and supports the Dodd-Frank provisions for transparency for all investors.
“CalSTRS took responsible action in opposing this legislation which would contribute to the continual incineration of investors’ rights and protections. We look to federal legislators to objectively lead by principles established by the words of President Abraham Lincoln at the Gettysburg Address, ‘We are a government of the people, by the people, for the people,’ and not, as this legislation suggests, for select people.”
The California State Teachers’ Retirement System, with a portfolio valued $206.5 billion as of April 30, 2017, is the largest educator-only pension fund in the world. CalSTRS administers a hybrid retirement system, consisting of traditional defined benefit, cash balance and voluntary defined contribution plans. CalSTRS also provides disability and survivor benefits. CalSTRS serves California’s more than 914,000 public school educators and their families from the state’s 1,700 school districts, county offices of education and community college districts.