NAM Takes Proxy Battle to Court
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The NAM Legal Center stood up for manufacturers in federal court this week, arguing that the Securities and Exchange Commission unlawfully suspended a rule governing proxy advisory firms.
A quick refresher: Proxy advisory firms advise institutional investors, like retirement fund managers, on how to vote on the policies of public companies in which the funds invest. This gives the firms significant power over public companies.
The fight: The NAM secured a significant victory in 2020 when the SEC finalized a rule increasing oversight of proxy advisory firms, which had long operated without SEC oversight.
- Manufacturers strongly supported the 2020 rule, which was designed to increase transparency, highlight conflicts of interest and provide accurate and decision-useful information to investors.
- At the beginning of the Biden administration, however, the SEC’s new leadership announced that it would not enforce the rule—without engaging in notice-and-comment rulemaking, a clear violation of administrative law.
Our move: Shortly after the SEC announced it wouldn’t enforce the 2020 rule, the NAM Legal Center filed a challenge to prevent the agency from abdicating its responsibilities. Put simply, a new administration cannot set aside lawfully promulgated rules that it happens to disagree with—and the NAM is standing up for that principle in court.
Our case: Arguing before the U.S. District Court for the Western District of Texas this week, the NAM made clear that the SEC acted unlawfully by suspending the compliance date of the proxy firm rule indefinitely without going through the required public notice-and-comment process to amend or repeal it.
- The SEC, in turn, argued that the agency hasn’t technically suspended the rule, but rather that SEC staff has made a nonbinding and “informal” recommendation not to enforce it—an action that has the same effect as an official suspension and one which the SEC’s own lawyers have described as providing “relief” to proxy firms.
Our take: “The SEC is attempting to end-run its legal obligation to enforce this rule,” said NAM Deputy General Counsel for Litigation Erica Klenicki. “We are in court fighting for manufacturers and their investors across the United States, who deserve protection from the outsized influence of proxy firms and who depend on the SEC, and all federal agencies, to adhere to the rule of law.”
Related
Manufacturers Unveil Competitiveness Agenda Ahead of Midterm Elections
“Competing to Win” offers a path for bringing the country together around policies, shared values and a unified purpose
Washington, D.C. – Ahead of the midterm elections, the National Association of Manufacturers released its policy roadmap, “Competing to Win,” a comprehensive blueprint featuring immediate solutions for bolstering manufacturers’ competitiveness. It is also a roadmap for policymakers on the laws and regulations needed to strengthen the manufacturing industry in the months and years ahead.
With the country facing rising prices, snarled supply chains and geopolitical turmoil, manufacturers are outlining an actionable competitiveness agenda that Americans across the political spectrum can support. “Competing to Win” includes the policies manufacturers in America will need in place to continue driving the country forward.
“‘Competing to Win’ offers a path for bringing our country together around policies, shared values and a unified purpose,” said NAM President and CEO Jay Timmons. “The NAM is putting forward a plan filled with ideas that policymakers could pursue immediately, including solutions to urgent problems, such as energy security, immigration reform, supply chain disruptions, the ongoing workforce shortage and more. Manufacturers have shown incredible resilience through difficult times, employing more workers now than before the pandemic, but continued resilience is not guaranteed without the policies that are critical to the state of manufacturing in America.”
The NAM and its members will leverage “Competing to Win” to shape policy debates ahead of the midterm elections, in the remainder of the 117th Congress and at the start of the 118th Congress—including in direct engagement with lawmakers, for grassroots activity, across traditional and digital media and through events in key states and districts as we did following the initial rollout of the roadmap in 2016.
The document focuses on 12 areas of action, and all policies are rooted in the values that have made America exceptional and keep manufacturing strong: free enterprise, competitiveness, individual liberty and equal opportunity.
Learn more about how manufacturers are leading and about the industry’s competitiveness agenda at nam.org/competing-to-win.
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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
