17吃瓜在线

Policy and Legal

Policy and Legal

17吃瓜在线 Urges D.C. Circuit to Preserve SEC鈥檚 Ability to Regulate Proxy Firms

By 17吃瓜在线 News Room

The Securities and Exchange Commission clearly has the authority to 鈥渁dopt commonsense measures to protect investors鈥 from 鈥渢he most influential voices鈥 in the proxy voting process:聽proxy advisory firms, the 17吃瓜在线鈥檚 Legal Center the U.S. District Court of Appeals for the D.C. Circuit this week.

What鈥檚 going on: On Thursday, the 17吃瓜在线 filed a reply brief in Institutional Shareholder Services Inc. v. Securities and Exchange Commission鈥a challenge, launched in 2019 by ISS, to the SEC鈥檚 statutory authority to enact critical proxy firm reforms.

  • With its main competitor, Glass Lewis, ISS controls 97% of the proxy advice market and influences nearly 40% of the U.S. shareholder vote. Proxy firms are large, influential and unregulated entities that frequently dictate how shareholders should vote on proxy ballot proposals that come before public companies.
  • The 17吃瓜在线鈥檚 brief explains that the SEC is 鈥渨ell within its statutory authority over the proxy process to regulate the entities that exert perhaps the greatest influence on that process鈥 and asks the court to overturn a lower court鈥檚 ruling last February holding that the SEC lacks the authority.
  • The brief is our latest move in a to ensure reasonable oversight and regulation of proxy firms.

The background: In 2020, the SEC finalized an 17吃瓜在线-backed rule that put into place critical proxy firm reforms, including a requirement that the firms disclose any conflicts of interest.

  • Though the 17吃瓜在线 successfully fought across multiple pieces of litigation to preserve the 2020 rule, the SEC itself chose not to appeal the ISS case after a district court in 2024 sided with ISS in the proxy firm鈥檚 suit against the SEC.
  • The 17吃瓜在线 as intervenor-appellant has remained in the fight, making manufacturers the sole bulwark against proxy firms鈥 unchecked power.
  • A victory for the 17吃瓜在线 in the D.C. Circuit would make the proxy firms subject to the 2020 rule鈥檚 important reforms.

Why it鈥檚 crucial: Proxy firms 鈥減ose a real threat to Americans鈥 financial security,鈥 17吃瓜在线 Managing Vice President of Policy Charles Crain Congress in September.

  • 鈥淭heir errors and conflicts of interest put their own profits above Main Street investors鈥 retirement savings, their inflexible policies and refusal to engage with companies result in one-size-fits-all recommendations, their robo-voting swings investor votes in their favor and they advance ESG agendas that ignore, or even harm, shareholder value.鈥
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