In a recent development, a court ruled against the Securities and Exchange Commission (SEC) for illegally rescinding a rule on proxy advisory firms. Ripple CLO Stuart Alderoty He highlighted this event, noting that the action was taken without following the Administrative Procedure Act, and SEC Chairman Gary Gensler personally directed the action.
In a recent development, a court ruled against the Securities and Exchange Commission (SEC) for illegally rescinding a rule on proxy advisory firms. Ripple CLO Stuart Alderoty highlighted this event, noting that the action was taken without following the Administrative Procedure Act, and SEC Chairman Gary Gensler personally led the action.
Alex DovbnyaThe SEC’s Proxy Advisory Firm Rule, enacted in 2020, was designed to increase transparency and accountability by requiring proxy advisory firms to share their voting recommendations with target firms at the same time they share them with their clients, disclose potential conflicts of interest, and allow companies to review and respond to recommendations before they are finalized.
The case, National Association of Manufacturers v. SEC, argues that the proxy rule, which never went into effect, was repealed in November 2021. This was a month before proxy firms were required to comply with the new terms.
Alex DovbnyaAccording to court documents, the rescission process began shortly after Gary Gensler assumed his role as SEC chairman. In June 2021, Gensler ordered his staff to reconsider the rule and suspended its enforcement in the meantime.
Pressure
Ripple’s legal team, along with other top executives, has frequently criticized the SEC and its leadership recently. This is particularly relevant in light of Ripple’s ongoing legal battle with the regulator, which has now lasted for more than three years.
As fall approaches, the SEC and Gensler are facing increasing pressure not only from Ripple, but also from the broader cryptocurrency industry. Alderoty’s latest post also highlights that traditional industry representatives are raising concerns about the SEC’s current regulatory approach and leadership.
