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April 26, 2023

In a Stinging Rebuke of the Financial Industry’s War Against the SEC, Federal Court Upholds SEC Rule that Helps Investors Get Advice on Proxy Votes

WASHINGTON, D.C.—Legal Director and Securities Specialist Stephen Hall issued the following statement on Monday’s court decision from the U.S. District Court for the Middle District of Tennessee rejecting a challenge to the SEC’s rule on proxy voting advice.

“Since 2021, the SEC has been working overtime to protect investors, markets, and socially useful capital formation, including at times modifying the worst of the rules adopted during the Trump administration.  Unfortunately, the financial industry, its allies like the Chamber of Commerce, and its trade groups like the Business Roundtable are relentlessly attacking the SEC and trying to prevent it from fulfilling its mission.  This week, a Federal District Court scrutinized and rejected the industry’s now-routine laundry list of baseless attacks on SEC rulemakings, and it upheld the SEC’s rule protecting the right of investors to receive independent and timely advice about upcoming proxy votes.  Those votes are extremely important because they elect corporate leaders, help set executive compensation, and shape corporate policy, all matters of increasingly intense interest to shareholders in the era of ESG investing.

“The court methodically considered and rejected numerous challenges to the SEC’s decision to revise a Trump-era rule that unduly burdened proxy advisory firms, undermined the public interest, and was met with staunch opposition from all but corporate management and their allies. For example, the court found that the official 30-day comment period (which in reality was considerably longer) complied with the law, that the SEC’s qualitative economic analysis of its rule was sufficient, and that the SEC adequately explained the rule, including the decision to modify the misguided 2020 rule adopted under the Trump administration.

“The court’s ruling will remove a cloud hanging over an important rule that investors need to ensure their access to independent, timely, and affordable advice regarding how their proxies should be voted.  Put differently, investor protection triumphed over corporate management’s attempt to prevent investors from getting independent advice. Unfortunately, the industry can be expected to continue its assault in the courts, by appealing this decision and hoping to find judges that will accept their baseless claims.”


Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit

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