SEC Sued Again Over Rescission of Proxy Voting Advice Rule

The U.S. Chamber of Commerce, Business Roundtable and Tennessee Chamber of Commerce & Industry ("the Plaintiffs") filed a Complaint for Declaratory and Injunctive Relief against the SEC for rescinding its 2020 rulemaking governing proxy voting advice. The SEC is also a party to a related litigation with the National Association of Manufacturers and the Natural Gas Services Group, Inc. (see related coverage).

In the Complaint, filed in the United States District Court for the Middle District of Tennessee, the Plaintiffs urged the court to set aside the rescission of the rule under the Administrative Procedure Act ("APA"), citing that it violated the APA by (i) not affording interested parties a meaningful comment period, (ii) failing to engage in reasoned decision-making due to the "rushed and biased process" that led to the Amended Rule and (iii) relying on a "skewed" cost-benefit analysis that focuses on profitability while ignoring substantial costs to companies and investors.

The Plaintiffs are seeking relief in the form of (i) a declaratory judgment that the 2022 rescission is arbitrary, capricious or otherwise contrary to law, (ii) an order setting aside the 2022 rescission in its entirety, (iii) an order delaying the effective date of the 2022 rescission, (iv) an order setting aside the SEC's suspension of the compliance date for the rule and (v) reimbursement of costs, including attorney fees and any other relief the Court deems just.