Manufacturers Celebrate Victory in NAM v. SEC
Judge Overturns SEC’s Suspension of 2020 Proxy Firm Rule
Washington, D.C. – Following a decision granting the National Association of Manufacturers’ motion for summary judgment in NAM v. SEC and vacating the Securities and Exchange Commission’s unlawful suspension of its duly promulgated proxy advisory firm rule, NAM Chief Legal Officer Linda Kelly released the following statement:
“Today’s decision is a victory for the rule of law, and the NAM Legal Center was proud to lead this effort for the industry. Federal agencies are bound by the Administrative Procedure Act—standards the SEC failed to meet by indefinitely delaying the compliance date for the 2020 proxy firm rule without notice-and-comment rulemaking. Manufacturers depend on regulators to promulgate and enforce reliable rules of the road, and the NAM looks forward to similarly holding the SEC to account in our ongoing case against the agency’s unlawful rescission of the 2020 rule.”
The NAM has long called for increased oversight of proxy advisory firms. In July 2020, the SEC issued final regulations to enhance transparency and accountability for proxy firms, a move NAM President and CEO Jay Timmons called a “long-sought, major win for the industry and millions of manufacturing workers.” In October 2020, the NAM filed a motion to intervene in ISS v. SEC (ISS’s attempt to overturn the rule) in support of these reforms.
In June 2021, the SEC announced that it was suspending enforcement of the 2020 rule; the NAM filed suit against the SEC in October 2021 challenging this unlawful suspension. The U.S. District Court for the Western District of Texas today issued an opinion granting the NAM’s motion for summary judgment and vacating the SEC’s suspension of the rule. As the court explained, “[Agencies] do not have the inherent power to stay or delay a final rule absent notice-and-comment rulemaking.”
In July 2022, the SEC rescinded critical portions of the 2020 rule, a move that Timmons said “epitomizes ‘arbitrary and capricious’ rulemaking.” The NAM has filed suit challenging the rescission; a summary judgement hearing in NAM v. SEC is scheduled for December 9, 2022.
The National Association of Manufacturers is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs more than 12.8 million men and women, contributes $2.77 trillion to the U.S. economy annually and accounts for 58% of private-sector research and development. The NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the NAM or to follow us on Twitter and Facebook, please visit www.nam.org.