Members of the House Financial Services Committee are urging U.S. Securities and Exchange Commission Chair Gary Gensler to revert his decision to reconsider rules governing proxy voting advice firms.
In 2020, the SEC approved rules addressing the application of the finalized rules governing proxy voting advice firms.
However, this month, Gensler directed his staff to consider whether to recommend further regulatory action regarding proxy voting advice.
“In particular, the staff should consider whether to recommend that the Commission revisit its 2020 codification of the definition of solicitation as encompassing proxy voting advice, the 2019 Interpretation and Guidance regarding that definition, and the conditions on exemptions from the information and filing requirements in the 2020 Rule Amendments, among other matters,” Gensler said.
Reps. Bryan Steil (R-WI) and Bill Huizenga (R-MI) of the House Finance Committee sent a letter to Gensler to revert his decision to reconsider.
“Proxy advisory firms must operate transparently, make accurate recommendations, and remain free from undisclosed conflicts of interest,” Steil said. “By stepping back from updated proxy advisory rules, the SEC jeopardizes these goals and hinders the ability to protect investors. I will continue working to protect proxy advisory firm reform in Congress and stand ready to work with the SEC to increase oversight and accountability of this industry.”
Last Congress, Steil introduced the Corporate Governance Reform and Transparency Act which addresses many of the principles the SEC included in their final rule. Steil also founded the Investing in Innovation Initiative, a project dedicated to promoting policies that strengthen capital markets.
“A small number of proxy advisors wield an enormous amount of influence over the elections within publicly traded companies. What new information does the SEC have that suddenly changes how it will conduct oversight of proxy advisory firms. It is critical that shareholders be made aware of any potential conflicts of interests these proxy advisory firms may have. The focus of the advisory firm should be to maximize shareholder value and returns for shareholders, not to align with activists to push political agendas. I look forward to hearing Chair Gensler’s rationale for this decision,” Huizenga said.
Steil serves on the Subcommittee on Investor Protection, Entrepreneurship, and Capital Markets and the Subcommittee on Housing, Community Development, and Insurance. He is also a member of the Fintech Task Force. Huizenga is the ranking member of the Subcommittee on Investor Protection, Entrepreneurship, and Capital Markets.