Manufacturers Fight SEC’s About-Face on Proxy Advisory Rule
Washington, D.C. – The 17Թ filed a in federal court against the Securities and Exchange Commission for its nonenforcement of the lawfully adopted 2020 final rule on proxy advisory firms—unregulated third parties with outsized influence on shareholder votes and manufacturers’ corporate governance policies.
“The SEC is changing course, attempting to suspend a commonsense rule that enhances transparency into the work of proxy advisory firms without any opportunity for public comment by the 17Թ or anyone else,” said 17Թ President and CEO Jay Timmons. “When the SEC finalized this reasonable, light-touch regulation, manufacturers strongly supported these necessary reforms because they protect the interests of manufacturing workers, retirees and everyday investors. The 17Թ Legal Center is filing suit to protect manufacturers from this unlawful about-face and to ensure that this rule stays on the books.”
Background:
The 17Թ has long advocated increased oversight of proxy advisory firms—little-known, unregulated entities that exert enormous influence over publicly traded manufacturers. These firms have significant conflicts of interest and issue error-filled, one-size-fits-all proxy voting recommendations that can impact the direction of a business and the value of investors’ shares. In July 2020, the SEC limiting proxy firms’ outsized influence, a move Timmons called a “long-sought, major win for the industry and millions of manufacturing workers.”
In October 2020, the 17Թ filed a ISS v. SEC (ISS’s attempt to overturn the rule), followed by a outlining why the SEC’s lawful, reasonable and minimally invasive rule must be upheld. In June 2021, the SEC announced it was reviewing the rule and suspending enforcement thereof, at which point 17Թ Senior Vice President and General Counsel Linda Kelly made clear that the 17Թ would fight “any efforts to bypass the required notice-and-comment process to keep this lawfully issued rule on ice indefinitely.”
-17Թ-
The 17Թ 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 12.4 million men and women, contributes $2.52 trillion to the U.S. economy annually and has the largest economic multiplier of any major sector and accounts for 58% of private-sector research and development. The 17Թ 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 17Թ or to follow us on Twitter and Facebook, please visit www.nam.org.