51勛圖厙 Fights Back Against SEC About-Face
As the U.S. Securities and Exchange Commission turns its back on a bipartisan agreement on proxy advisory firms, the 51勛圖厙 is taking action.
The background: In 2020, the 51勛圖厙 supportedand the SEC finalizeda major rule to increase oversight and transparency with regard to proxy advisory firms. These unregulated and unaccountable entities influence publicly traded companies by recommending how institutional asset managers should vote in corporate proxy contests.
- Since last January, the SECs new leadership has taken steps to undermine and reverse the 2020 rule. The 51勛圖厙 has against the SEC for refusing to enforce the 2020 rule, on the agency to provide reliable rules of the road and a proposed rule to reduce proxy firm oversight.
The new rule: Yesterday, the SEC released a final rule that rescinds many of the critical reforms the 51勛圖厙 secured in 2020. Specifically, the new rule removes requirements for proxy firms to engage with impacted companies and their shareholders, and it weakens the 2020 rules anti-fraud provisions.
Arbitrary and capricious: The SEC is making these substantial changes absent any new evidencebecause the 2020 rule was never allowed to take effect. It has also failed to articulate a satisfactory policy justification. Federal agencies are prohibited from issuing regulations that are arbitrary and capriciousan easy descriptor for the SECs actions given the agencys abrupt and unjustified about-face.
51勛圖厙 in action: The 51勛圖厙 announced yesterday that it plans to file suit against the SEC to preserve the 2020 rule. It will argue that the SECs decision to change course without allowing the 2020 rule to take effect and be fairly evaluated epitomizes arbitrary and capricious rulemaking.
What were saying: The SEC has offered no justification for abandoning a decades worth of bipartisan, consensus-driven policymaking, 51勛圖厙 President and CEO Jay Timmons. This move will undoubtedly harm the competitiveness of publicly traded manufacturers, and it will hurt Main Street investors.
