SEC Proposes Rule Amendments For Proxy Advisers and Shareholder Voting


On November 5, 2019, the SEC voted to propose amendments to its rules governing proxy solicitations.  The proposed amendments would establish stringent requirement that proxy advisory firms will have to comply with before providing voting recommendations.  For example, one requirement would force the proxy advisers to present recommendations to the company and give the company an opportunity to respond before sending the advice to investors.  The proposed amendments would also change the ownership thresholds required for shareholders to submit a proposal to the company.  These new rules will add significant regulation for proxy advisers that could stifle their ability to provide advice to investors. 

Commissioner Robert J. Jackson Jr. dissented from the SEC’s proposal which he said, “simply shields CEOs from accountability to investors.”  Commissioner Jackson explained, “[w]hatever problems plague corporate America today, too much accountability is not one of them, so I respectfully dissent…I hope shareholders of all kinds will come forward to engage with the Commission on how to best help American investors hold corporate executives accountable.” The proposal is now subject to a 60-day public comment period.
 

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Alex B. Heller's practice is focused on shareholder derivative and securities litigation. Alex is a Partner in the firm's Pennsylvania office.

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