For decades, SEC rule 14a-8 has allowed shareholders to submit proposals for inclusion in a company’s proxy statement asking the company to consider additional material disclosures, policies, or governance changes. In September 2020, the SEC imposed a new rule that sharply restricts shareholders’ ability to submit proposals through dramatically increased requirements for the amount of stock held, the duration of stock ownership, and the votes required for resubmitting proposals.
In June of 2021, ICCR, As You Sow and James McRitchie filed a complaint in the District Court for the District of Columbia challenging the SEC's recent amendments. The complaint, which you can read here, charges that the SEC’s rule changes, promulgated under the previous administration, are unlawful under the Administrative Procedure Act (APA), and seeks a judgment to have them vacated.
Timeline of Events
- In December of 2021, the plaintiffs submitted a reply in support of a motion for summary judgement.
- In October of 2021, The Shareholder Commons filed an Amicus "friend of the court" brief in support of the plaintiffs.
- In September of 2021, The Council of Institutional Investors filed an Amicus "friend of the court" brief in support of the plaintiffs.
- In September of 2021 the plaintiffs filed a motion for summary judgement.
- In June of 2021, ICCR, As You Sow and James McRitchie filed a lawsuit to overturn the SEC's revisions to rule 14a-8. Read the press release here.
- September 23, 2020 - The SEC revises Rule 14a-8, blocking most investors' ability to file proxy proposals.
Recent Articles Related to the Lawsuit
July 27, 2021 - IHS Markit - Shareholders Forging Ahead with Lawsuit over US SEC Rule Limiting Ability to Submit Resolutions
June 18, 2021 - UUA.org - Investors File Suit to Overturn Trump Era SEC Rule
June 15, 2021 - Financial Advisor - $4 Trillion Investor Coalition Sues SEC to Overturn Shareholder Proposal Limits
August 10, 2020 - Value Walk - Lawsuit Challenges SEC's Weakening of Rule 14a-8
Older Articles related to the SEC lawsuit:
- Reuters: Investors sue U.S. regulator over Trump-era AGM resolution rules
- Newsweek: American Express, GE, ExxonMobil, smacked by shareholders over diversity, climate change
- Forbes: What you need to know about the 2021 Proxy Season
- Morningstar: SEC sued by shareholders
- Financial Times: Nuns sue SEC to stop shareholder proposal rule
- FT Agenda: Shareholders defy SEC on proposal rule
- NY Times: The tug of war over corporate transparency
- Politico: Investors sue SEC over Trump-era rule restricting shareholder votes
- Bloomberg Law: Shareholder rule change ‘flawed at every turn,’ investors say
- Responsible Investor: Investor groups take US regulator to court over plans to make it harder to file shareholder resolutions
- Law 360: Investors want SEC's 'flawed' shareholder rules scrapped
- JD Supra: Investors sue to invalidate Rule 14a-8 amendments
- Law.com: Suit claims new SEC rule “guts” shareholder proposals