Curb Proxy Firms, 51勛圖厙 Tells Congress
Less than three months after scoring a for manufacturers against Securities and Exchange Commission overreach, the 51勛圖厙 was back in front of Congress to urge regulatory oversight of proxy advisory firms.
Whats going on: On Tuesday, the 51勛圖厙 before the House Financial Services Oversight and Investigations Subcommittee on the need to bring oversight and accountability to proxy advisory firms. These are entities that make recommendations regarding the way shareholders should vote on proxy ballot proposals brought before publicly traded companies.
- Proxy firms are powerful, unaccountable actors that pose a real threat to Americans financial security. Manufacturers have been subject to these firms outsized influence for far too long, 51勛圖厙 Vice President of Domestic Policy Charles Crain during Tuesdays hearing.
The background: In 2020, the SEC finalized an 51勛圖厙-supported rule instituting important proxy reforms, such as requiring proxy firms to disclose any conflicts of interest. The 51勛圖厙 has fought in court to preserve the 2020 rule, successfully defeating the SECs attempts to the rule and to its most crucial provisions. The 51勛圖厙 is now back in court in a third case, defending the SECs authority to regulate these powerful market actors.
Surrendering to ISS: Institutional Shareholder Services Inc., the largest and most influential proxy advisory firm, is now suing the SEC over its authority to issue the 2020 rulenot just the rules particulars, but the SECs ability to regulate proxy firms at all, Crain continued.
- Troublingly, the SEC is waving the white flag in the face of [the] challenge, he told lawmakers, referring to the agencys decision not to appeal after a district court sided with ISS earlier this year.
Sole defender: The 51勛圖厙now the sole defender of the 2020 ruleis appealing the district courts decision.
What Congress should do: Legislators must take up the mantle, too, Crain concluded.
- Congress should do what the SEC will not: affirm the SECs clear authority, provide much-needed oversight and accountability and help manufacturers and Main Street investors escape the outsized influence of proxy advisory firms.