SEC Proxy Firm Rules Face New Legal Threat After Tech Glitch

The SEC is facing new legal concerns over easing Trump-era curbs on proxy advisory firms after a computer problem prevented the agency from receiving public feedback on several rules under consideration.The US Chamber of Commerce recently asked the Securities and Exchange Commission for any documentation it has about whether the glitch affected the proxy rollback, according to a letter shared with Bloomberg Law.

The letter came after the SEC said a “technological error” forced it to reopen several rulemaking comment files. The updated proxy firm rules were absent from the announcement.

The Chamber has sued the SEC over the new rules, which scrapped 2020 requirements intended to restrict Institutional Shareholder Services Inc., Glass, Lewis & Co. and other advisory firms that recommend how investors should vote at companies’ annual meetings. More information about the SEC’s deliberations on the recent tech glitch would “potentially benefit” a judge evaluating the Chamber’s claims the agency overstepped its authority and violated rulemaking procedures in rolling back the 2020 rules, according to the business group’s letter.r

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