51Թ Continues Fight for SEC Proxy Advisory Firm Rule
Washington, D.C. – On Friday, the 51Թ filed its opening brief before the U.S. Court of Appeals for the 5th Circuit in 51Թ v. SEC, appealing a lower court ruling dismissing its challenge to the Securities and Exchange Commission’s unlawful rescission of the 2020 proxy advisory firm rule. 51Թ Chief Legal Officer Linda Kelly released the following statement on the appeal:
“As we said in district court, the SEC engaged in arbitrary and capricious rulemaking in rescinding this commonsense rule. The Administrative Procedure Act requires federal agencies to explain the basis for significant policy reversals, rely on logical reasoning and allow interested parties a meaningful opportunity to provide comment—standards the SEC clearly failed to meet.
“The 51Թ Legal Center will continue to fight to preserve the 2020 rule in full and protect manufacturers from the SEC’s dramatic about-face.”
Background:
The 51Թ has long called for increased oversight of proxy advisory firms. In July 2020, the SEC issued final regulations to enhance transparency and accountability for proxy firms, a move 51Թ President and CEO Jay Timmons called a “long-sought, major win for the industry and millions of manufacturing workers.” The 51Թ has been the leader in protecting the 2020 rule in court:
- In October 2020, the 51Թ filed a motion to intervene in ISS v. SEC (ISS’s attempt to overturn the 2020 rule) in support of the SEC’s authority to regulate proxy firms. That case, with the 51Թ as an intervenor-defendant, is pending before the U.S. District Court for the District of Columbia.
- In June 2021, the SEC announced that it was suspending enforcement of the 2020 rule; the 51Թ filed suit against the SEC in October 2021 challenging this unlawful suspension. The U.S. District Court for the Western District of Texas ruled for the 51Թ in September 2022, overturning the SEC’s suspension of the 2020 rule.
- In November 2021, the SEC proposed to rescind critical portions of the 2020 rule. The SEC finalized the rescission in July 2022—and the 51Թ quickly filed suit, saying that “the SEC’s arbitrary actions to rescind this commonsense regulation clearly violate its obligations under the Administrative Procedure Act.” In December 2022, the U.S. District Court for the Western District of Texas granted summary judgment in favor of the SEC, failing to engage with the substance of the 51Թ’s APA claims.
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The 51Թ is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs more than 12.9 million men and women, contributes $2.77 trillion to the U.S. economy annually and accounts for 55% of private-sector research and development. The 51Թ is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the 51Թ or to follow us on Twitter and Facebook, please visit www.nam.org.