S. 1670 — INDEX Act

This section adds a new section 208A to the Investment Advisers Act of 1940 to require investment advisers of passively managed funds—defined as qualified funds (e.g., mutual funds, private funds, certain retirement plans) that track an index, disclose as passive or index funds, or allocate at least 40% of assets to an index-tracking strategy—to vote proxies on covered securities (i.e., non-investment company voting securities held by the fund) proportionately according to instructions from the fund's security holders or economic interest holders when the adviser (and affiliates) controls more than 1% of the registrant's outstanding voting securities. If voting instructions are not received for all relevant shares, the adviser must abstain from voting those shares. The section further requires pass-through voting instructions for nested passively managed funds and prohibits reimbursement from the registrant for related expenses.