As we hoped and expected, the SEC has rescinded the proxy advisory rules pushed through by partisan vote at the end of the Trump administration. (The complaint from the minority Commissioners about partisanship is predictable but utterly hypocritical.) We regret that the rules maintained the categorization of proxy advisory reports as solicitations but the CII has issued a statement saying that they will be challenging that provision in the upcoming lawsuit filed by ISS. We will have more on this new rulemaking and the lawsuit.
The Securities and Exchange Commission voted Wednesday to rescind rules that had required proxy advisory firms to inform companies of how they are advising shareholders to vote in corporate elections.
Revising a rule that was voted on in 2020 and only took effect 7 months ago is an unusual move for the agency, and Republicans on the commission vocally opposed it because, they argue, the change is being made not because new information has come to light, but due to a change in the partisan makeup of the commission.
The modification will be welcomed by proxy advice firms like Institutional Shareholder Services and Glass Lewis and by asset managers and pension funds who have argued the rules increase costs and lead to service delays without doing anything to protect investors.
In a Wednesday statement, SEC Chairman Gary Gensler, a Democrat, defended the rule change as necessary to ensure that investors are able to “receive independent and timely advice,” and noting that the revision keeps in place rules that require proxy firms to disclose conflicts of interest.SEC repeals Trump-era restrictions on proxy advice companies – MarketWatch