TheCorporateCounsel.net

I blogged in May that a Tennessee court had dismissed a lawsuit filed by the US Chamber of Commerce and the Business Roundtable that challenged the SEC’s decision to reverse parts of its 2020 rulemaking on proxy advisors. The 2020 rules would have imposed conditions on proxy voting advice that the corporate community felt would improve lead-time, transparency and accuracy of voting recommendations.

Last week, the the 6th Circuit heard oral arguments for the Chamber’s appeal of the dismissal. Here are the briefs that lay out the Chamber’s arguments that the SEC action violated the Administrative Procedure Act. The National Association of Manufacturers has also filed an amicus brief in this case. NAM’s parallel case went before the 5th Circuit in August. Bloomberg Law reported at that time:

The hearing will be the biggest judicial test yet of SEC authority in removing 2020 curbs on Institutional Shareholder Services Inc., Glass, Lewis & Co., and other firms that advise large funds voting on ESG proposals and other matters at annual shareholder meetings. The proceedings will follow in the wake of 2022 Fifth Circuit decisions limiting the power of SEC administrative judges and finding the Consumer Financial Protection Bureau’s funding unconstitutional.

I can’t predict how this will turn out, but I bet there are a lot of people who would be pleasantly surprised if we somehow know the outcome in time for proxy season. If the parties are aiming to stretch this litigation across a significant portion of Chair Gensler’s term, they are making good progress on that front.

– Liz Dunshee