Lobbying giant calls for SEC disclosure on proxy rules error

November 11, 2022

America’s biggest business lobbying group is calling for answers on how a computer glitch affected a public consultation on rules regulating how proxy firms advise investors on voting decisions at AGMs.

The US Chamber of Commerce (USCC) has sent a Freedom of Information (FOI) Act request for more details from the Securities and Exchange Commission (SEC), an independent governmental agency which polices market manipulation.

It follows an admission from the SEC that a “technological glitch” in the summer of 2021 affected the processing of feedback ahead of their published proposals to ease regulations for proxy advisory firm rules in November 2021.

The FOI, sent by USCC VP Tom Quaadman on October 24, says the release of details about the glitch will “contribute significantly to public understanding of the operations or activities of the government.”

A separate letter sent by Quaadman to SEC chairman Gary Gensler on November 1 explained their concerns were over the impact on 11 comment files due to an error with an online feedback form.

Quaadman added that the USCC feels the SEC has “pushed the envelope in terms of both policy and process with its regulatory agenda”.

The SEC has so far declined to comment.

The rules, which were initially adopted in July 2020, were amended this summer.

It prompted the USCC to sue the SEC for “not following proper procedures or providing adequate justification” for its decision to make the changes.

The changes also drew criticism from organisations including the Chamber and the National Association of Manufacturers, which also sued the SEC over regulations it said were unwarranted.

USCC president and CEO Suzanne Clark said: “The 2020 Proxy Advisor Rule was put in place to protect investors and to boost the competitiveness of the US public capital markets.

“The SEC’s harmful decision to roll back these reforms will allow proxy advisors to operate as a black box, as they have for decades, and create disincentives for companies to go, and stay, public.

“Public companies are a key source of growth and innovation for our economy and an important source of wealth creation for main street investors.

“But the SEC’s actions will deteriorate the public company model, ultimately depriving main street investors and everyday Americans dynamic growth opportunities to help build wealth and save for retirement.”