SEC and DOL Regulatory Agenda and House Hearing on Shareholder Proposals
Regulatory Agenda Insights
As noted in Friday’s News Roundup, the federal government regulatory agenda – the RegFlex agenda – was released last week. The RegFlex agenda details all of the individual regulatory items that each government department and agency will address.
Three items are noteworthy:
SEC: “Shareholder Proposal Modernization” will undoubtedly look to further restrict shareholder rights under Rule 14a-8.
Proposed rule: The agenda recommends the Commision to, “propose rule amendments to modernize the requirements of Exchange Act Rule 14a-8 to reduce compliance burdens for registrants and account for developments since the rule was last amended.”
Further insights: We’re watching the House Financial Services Committee discussions for signals of what this proposal may contain.
Timing: TBD, but expect in the next 6 months.
SEC: “Rationalizaton of Disclosure Practices” will look to ease reporting requirements on issuers.
Proposed rule: The agenda recommends “that the Commission propose rule amendments to rationalize disclosure practices to facilitate material disclosure by companies and shareholders' access to that information.”
Timing: TBD.
Department of Labor: “Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights” will once again re-write the provisions of ERISA that affect retirement plans.
Proposed rule: The expectation is that this new rule will roll back to the standard passed under the first Trump Administration that restricts fiduciaries from considering non-pecuniary factors, such as ESG considerations, in their investment decisions.
Further insights: Curiously, this proposal is listed as being in the Final Rule stage, which may mean the Department of Labor believes they can change this rule without a notice and comment period. Stay tuned.
Timing: 2026.
What We Are Watching This Week
New Procedure for CDFIs: The Treasury Department has submitted a new proposal that would require applicants for the Community Development Financial Intuitions (CDFI) Fund awards to disclose if the funds will be used for diversity, equity, and inclusion (DEI) or climate purposes. If finalized, this new requirement could limit access to the $290 million in the CDFI Fund.
Committee Hearing: The House Financial Services Committee is holding a hearing on Wednesday, September 10 at 10am titled “Proxy Power and Proposal Abuse: Reforming Rule 14-a8 to Protect Shareholder Value.” Brad Lander, NYC Comptroller, will be speaking as the Democratic witness during the panel. Several unfriendly bills to sustainable investing are on the agenda to be discussed. We will send out updates from the hearing.