The NAM Legal Center stood up for manufacturers in federal court this week, arguing that the Securities and Exchange Commission unlawfully suspended a rule governing proxy advisory firms.

A quick refresher: Proxy advisory firms advise institutional investors, like retirement fund managers, on how to vote on the policies of public companies in which the funds invest. This gives the firms significant power over public companies.

The fight: The NAM secured a significant victory in 2020 when the SEC finalized a rule increasing oversight of proxy advisory firms, which had long operated without SEC oversight.

• Manufacturers strongly supported the 2020 rule, which was designed to increase transparency, highlight conflicts of interest and provide accurate and decision-useful information to investors.
• At the beginning of the Biden administration, however, the SEC’s new leadership announced that it would not enforce the rule—without engaging in notice-and-comment rulemaking, a clear violation of administrative law.

Our move: Shortly after the SEC announced it wouldn’t enforce the 2020 rule, the NAM Legal Center filed a challenge to prevent the agency from abdicating its responsibilities. Put simply, a new administration cannot set aside lawfully promulgated rules that it happens to disagree with—and the NAM is standing up for that principle in court.

Our case: Arguing before the U.S. District Court for the Western District of Texas this week, the NAM made clear that the SEC acted...

Read Full Story: https://www.nam.org/nam-takes-proxy-battle-to-court-17650/