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February 28, 2024

In Case on SEC Proxy Rules, Federal Court Sides with Investors Who Need Independent Advice About How to Vote Their Shares

WASHINGTON, D.C.—Legal Director and Securities Specialist Stephen Hall issued the following statement on a recent court decision from the U.S. District Court for the District of Columbia in Institutional Shareholder Services, Inc. v. SEC, a lawsuit challenging a Trump-era rule that made it harder for proxy advisory firms to provide advice to shareholders:

“This ruling is a win for investors who want objective, expert advice about how to cast their votes on important matters of company governance. Proxy advisory firms help investors by providing valuable information that facilitates their engagement.  These firms provide research and analysis and make recommendations on matters subject to a vote. Because the volume, frequency, and complexity of proxy statements make it difficult for many investors to conduct their own analyses, these firms play a crucial role.  Ultimately, they provide investors with independent advice that is not tainted or spun by the inherently biased management of a company.

“Unfortunately, the SEC during the Trump administration sided with corporate interests instead of the public interest and investors. Its rule equated proxy advice with proxy solicitation, triggering additional and inappropriate requirements. Although the SEC later revised the rule, it left that provision intact, subjecting proxy advisory firms to requirements intended for those who solicit proxies not to provide disinterested guidance but to achieve their own objectives.

“In a decision issue last Friday, Judge Mehta of the U.S. District Court for the District of Columbia held that the SEC had ‘acted contrary to law and in excess of statutory authority’ by defining proxy solicitation to include proxy voting advice for a fee. The court held that the ordinary meaning of solicitation did not encompass voting advice by a firm with no interest in the outcome of the vote. We applaud the decision, which is a victory for a clear-eyed reading of the law and for investors who seek unbiased advice as part of their participation in corporate governance.”


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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