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The U.S. Securities and Exchange Commission said Tuesday that it will not comply with Trump-era rules to shareholder advisory firms, and will hit companies like ExxonMobil, which have argued that advisory advisors have too much power.
In a statement, Gary Gensler, chairman of the committee he said asked agency staff to review the restrictions for consultants provided by the committee Approved in July 2020. Employees should reconsider guidelines aimed at defanging proxy advisors agency published in 2019, he said.
SEC he said “It will not recommend enforcement measures” based on the 2019 guidelines and 2020 rules for prosecutors ’advisers, now that the commission is“ considering further regulatory action in this area ”.
Gensler’s decision has won for Institutional Shareholder Services and Glass Lewis (the two largest proxy consulting firms). Public companies represented by the Business Roundtable and the U.S. Chamber of Commerce put pressure on the SEC to impose regulations on representative advisors.
But investors – who use the recommendations of representative advisors to vote on corporate board room issues – welcomed the SEC’s action.
“June is Christmas for investors,” said Amy Borrus, executive director of the Institutional Investors Board. “The SEC President has taken Gensler’s decision to review the agency’s review of controversial actions on its advice to investors and representative advisory firms that would be bound by the regime regulated by the committee approved by the previous administration.”
The ISS complained to the SEC to stop its guidelines and the 2020 rules, and that case is still pending in court. Oral arguments are scheduled for June 7th. SEC regulations for advisory representatives are expected to be combined with the new legal costs of the ISS and Glass Lewis.
“We support the decision announced by the SEC to reconsider the rules for its advisory representatives,” the ISS said. he said in a statement.
The ISS and Glass Lewis advise investors on how to vote on climate change in board elections and how their recommendations can affect corporate issues.
ISS and Glass Lewis respectively accepted the proposed hedge fund for three and two candidates for the ExxonMobil committee was presented by Motor 1 last week. They have confirmed that they have won at least two of the candidates ’seats.
In a letter to the SEC in 2020, Exxon also said it supported the regulations for advising agency representatives.
Dennis Kelleher, chairman of the advocacy group Better Markets, said: “Trump’s actions in the SEC were wrong and probably illegal. Given the SEC’s protection and lack of management, today’s actions are well underway to restore investor rights and strengthen investors. “.
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