(Reuters) -National Association of Manufacturers, a business group, sued the US Securities and Exchange Commission on Wednesday for refusing to enforce a Trump-era rule in companies advising investors on how to vote in corporate elections.
Last year, the Securities and Exchange Commission finalized restrictions on proxy advisers by requiring them to give companies a chance to see their recommendations and disclose conflicts of interest. But the agency's new democratic leadership has said it will review that rule and not enforce it in the meantime.
NAM's Advocate General Linda Kelly said this constitutes an illegal reversal of the Trump era rule.
The trial marks the first major settlement between corporate interests and the SEC under the leadership of its new chairman, Gary Gensler, and is the latest in an ongoing battle between corporate America and the proxy consulting industry.
For years, US business interests have been pushing for proxy advisers, who have the power to turn votes in company director elections and in hotkey issues such as climate change, gender equality and lobbying.
NAM, which filed the lawsuit with equipment supplier Natural Gas Services Group Inc in the western district of Texas, wants the SEC to start enforcing the rule, Kelly said.
"Our members are getting ready for the next proxy season," Kelly said. , with reference to the many corporate annual meetings that take place at the beginning of next year.
"In the regulations, this whipping undermines the predictability regulated entities are looking for and the capital markets need."
Natural Gas Services has been hampered in efforts to correct information provided by proxy advisers, said Kelly, which led the company to partner with NAM on the legal challenge.
Proxy Advisor Institutional Shareholder Services Inc. and Glass, Lewis & Co. has said that the Trump-era rule would delay the advice they send out to investors and limit their independence. Catalog