Bryan Corbett: “Active investors play an essential role in holding entrenched corporate management accountable, which benefits their investors, like pensions, foundations, and endowments, and the U.S. capital markets.”
WASHINGTON, DC – Today, Managed Funds Association (MFA), the trade association for the global alternative asset management industry, submitted an amicus curiae brief to the Delaware Chancery Court in the Politan Capital Management LP v. Kiani, et al. case.
MFA’s brief seeks to prevent the widespread adoption of corporate bylaws that would hurt MFA members, their investors, and shareholders broadly by limiting stockholder engagement and negatively affecting capital allocation decisions in the U.S. capital markets. The brief urges the Court to dismiss three provisions of Masimo Corporation’s recently adopted Bylaw Amendments designed to discourage shareholder engagement by requiring the disclosure of proprietary, highly confidential, and commercially sensitive IP. The three provisions MFA argues against include:
- “Covered Person Disclosures,” which would require an investment fund manager that makes a Board nomination or proposal to disclose individual investors in the fund.
- “Future Plans Disclosures,” which would require any investment fund manager that makes a Board nomination or proposal to disclose any future investment plans in other public companies or plans to nominate a director to a public company within the next 12 months.
- “Supporting Stockholder Disclosures,” which would require any investment fund manager that makes a nomination or proposal to disclose the names of other stockholders who support the nomination.
“If upheld by the Court, these Bylaw Amendments will have a chilling effect on investors who root out corporate fraud, waste, and abuse,” said Bryan Corbett, President & CEO of MFA. “These provisions are designed to discourage investor engagement that would strengthen corporate governance by forcing the disclosure of proprietary and sensitive confidential information. Active investors play an essential role in holding entrenched corporate management accountable, which benefits their investors, like pensions, foundations, and endowments, and the U.S. capital markets.”
MFA is not party to the case, and Politan Capital Management is not a member of MFA.
MFA’s brief highlights how the Bylaw Amendments, if upheld by the Court, will dissuade stockholder engagement and negatively impact investors and the markets. From the brief:
“[T]his case presents the Court with an opportunity to establish such a limiting principle with respect to the appropriate information that can be sought under advance notice bylaws. Otherwise, the continued metastasis of the requests for information included in advance notice bylaws could prevent investment funds from making nominations or proposals, cause serious damage to stockholder engagement, impede the stockholder franchise, and negatively impact the functioning of our capital markets.”
MFA’s full amicus curiae brief can be found here.
About the Global Hedge Fund and Alternative Asset Management Industry
The global hedge fund and alternative asset management industry, including hedge funds, credit, managed futures, and hybrid funds that invest in private companies, has assets under management of $4 trillion (Q4 2022). The industry serves thousands of public and private pension funds, charitable endowments, foundations, sovereign governments, and other global institutional investors by providing portfolio diversification and risk-adjusted returns to help meet their funding obligations and return targets.
About the Managed Funds Association
Managed Funds Association (MFA), based in Washington, DC, New York, and Brussels, represents the global alternative asset management industry. MFA’s mission is to advance the ability of alternative asset managers to raise capital, invest, and generate returns for their beneficiaries. MFA advocates on behalf of its membership and convenes stakeholders to address global regulatory, operational, and business issues. MFA has more than 150 member firms, including traditional hedge funds, crossover funds, and private credit funds, that collectively manage nearly $2 trillion across a diverse group of investment strategies. Member firms help pension plans, university endowments, charitable foundations, and other institutional investors to diversify their investments, manage risk, and generate attractive returns over time.