State Legislation Targeting Proxy Advisors and SEC Oversight Hearings

11 States Introduce Legislation Targeting Proxy Advisors

So far this year, 11 states (IN, NE, WV, MS, KS, OK, SC, WI, AZ, IA, and KY) have introduced the Proxy Advisor Transparency Act—legislation that broadly targets proxy advisors and aims to stifle shareholder advocacy, research, and analysis.

Copycats: These bills are all modeled on a Texas law, SB 2337, that was passed last year, which requires any proxy advisor who goes against company recommendations to provide onerous disclosures and financial analyses.

Overly broad: One significant concern with these ‘copycat’ bills is that the definition of a proxy advisor is very broad, encompassing non-profits, researchers, and law firms.

Legal action: The bills also allow any shareholder of the company in question to file a lawsuit against the proxy advisor. State attorneys general are allowed to step in and take over the lawsuit on behalf of the shareholder.

In court: SB 2337 was challenged by ISS and Glass Lewis last fall, and the companies received a preliminary injunction, protecting them from enforcement action. Currently, Ceres, ICCR, and the United Church Funds have also filed a lawsuit against the state.

Chair Atkins on the Hill

Securities and Exchange Commission (SEC) Chair Paul Atkins will be on the Hill this week for oversight hearings in both the House of Representatives and the Senate.

Wednesday: The House Financial Services Committee is holding its SEC Oversight Hearing at 10am. Listen in here.

Thursday: The Senate Banking Committee will holds its oversight hearing the next day, also at 10am. Listen in here.

What We are Watching This Week

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