SEC avoids enforcement of Trump-era proxy advisor rules

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The U.S. Securities and Exchange Commission said on Tuesday that it will not enforce Trump-era regulations on shareholder advisory companies, which will hit companies such as Exxon Mobil that believe that agent advisors have too much power.

In a statement, committee chair Gary Gensler Say He has asked the staff of the agency to review the board’s restrictions on acting consultants Adopted in July 2020The staff should also reconsider the guidelines designed to discredit the agency consultant Institutions released in 2019, He says.

U.S. Securities and Exchange Commission Say According to the agency’s 2019 agency consultant guidelines and 2020 rules, “it will not recommend enforcement actions” because the committee is “considering further regulatory actions in this area.”

Gensler’s decision marks the victory of Institutional Shareholder Services and Glass Lewis, the two largest agency consulting companies. Listed companies represented by the Business Roundtable and the U.S. Chamber of Commerce lobbied the U.S. Securities and Exchange Commission to supervise agency advisors.

But investors who used proxy advisors to recommend voting on the company’s board of directors cheered the SEC’s actions.

“For investors, June is Christmas,” said Amy Borus, executive director of the Institutional Investor Committee. “The Chairman of the US Securities and Exchange Commission Gensler decided today to let the agency consider re-examining its controversial actions in agency recommendations. This is a huge victory for investors and agency consulting firms, who would have been affected by the committee’s previous session. The constraints of the regulatory system approved by the government.

ISS sued the US Securities and Exchange Commission to stop its guidance and 2020 rules, and the case is still pending in court. The oral debate is scheduled to take place on June 7. It is expected that the SEC’s agency consultant regulations will make ISS and Glass Lewis bear the new legal costs.

“We welcome the announcement of the SEC’s decision to consider reviewing its proxy advisory rulemaking,” ISS Say In a statement.

ISS and Glass Lewis advise investors on how to vote on corporate issues ranging from climate change disclosures to the election of board members, and their recommendations can be influential.

International Space Station and Glass Lewis​​ endorsement Last week, the radical hedge fund Engine No 1 nominated three and two ExxonMobil board candidates. At least two nominees have been confirmed to win seats.

In a letter to the U.S. Securities and Exchange Commission in 2020, Exxon Mobil also expressed support for the agency’s regulations on agency advisors.

Dennis Kelleher, president of the advocacy organization Better Markets, said: “Trump’s SEC’s actions are wrong and may be illegal. Given that the SEC exists to protect investors, not current management, Today’s action has correctly started the process of restoring investor rights and re-empowering investors.”

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