SEC Intermediary Fee Rules Threatened by New Rule After Tech Crisis | Media Pyro

The SEC is facing new regulatory concerns about easing Trump-era restrictions on proxy advisory firms after a computer glitch prevented the agency from receiving public feedback on some rules. is considered.

The U.S. Chamber of Commerce recently asked the Securities and Exchange Commission for documents it has about the diplomatic cycle, according to a letter provided to Bloomberg Law. The letter came after the SEC said a “technical error” forced the opening of regulatory filings. The revised brokerage firm rules were missing from the announcement.

The Senate has rejected the SEC’s new rules, which eliminated requirements for 2020 to prevent Corporate Shareholder Services Inc., Glass, Lewis & Co. and other advisory firms dictate how investors vote at companies’ annual meetings. More information on the SEC’s deliberations over the recent technology crisis will “produce a positive outcome” for a judge reviewing the Chamber’s claims that the agency violated its mandate and violated the law-making process for change the 2020 rules, according to the letter from the business group.

“If there’s a flaw in the process, I mean, it’s something that the courts need to recognize,” Thomas Quaadman, vice president of the Anti-Money Laundering Institute, said in an interview.

An SEC spokesman declined to comment.

The SEC’s failure to receive and process information on the revised proxy voting advisory rules violates the Administrative Procedure Act, the House said in its letter. The law governs corporate law enforcement and is the focus of a class-action lawsuit brought in July in the U.S. District Court for the Middle District of Tennessee.

But accusing a judge of wrongdoing by the SEC could be a challenge for the House, if it decides to raise concerns in court. Courts expect agencies to make laws in good faith, and proving the difference to judges is difficult, said Richard Pierce, a George Washington University School of Law professor who studies according to government regulations.

“It’s rare when an agency lies about something,” Pierce said. “But if they’re caught, if there’s real evidence that they’re lying, the whole attitude of the judges will change, and they’ll be less sympathetic.”

Hide, Seek

The agency said on October 7 that it had conducted an audit and discovered a problem starting in June 2021 that prevented it from seeing information on a dozen of the commission’s legislative projects, including eight items considered by the stock exchanges, the Financial Industry Regulatory Authority and the Options Exchange. Corp. Issues include SEC disclosures and requests for cybersecurity, among other things.

The SEC gave the public until Nov. 1 to provide feedback missing from the agency’s online filings on rulemaking issues.

The new brokerage firm rules are among the twelve proposed rules by the SEC starting in June 2021 and comment periods are still closed.

The SEC proposed revised brokerage firm rules in November 2021 and will be enacted in July. Several spokespeople for the rules, including the Chamber and the National Association of Manufacturers, also sued the agency for what they called unnecessary rules.

The agency won’t hide technical and regulatory problems if it faces a problem, said Elisse Walter, a Democrat who chaired the SEC during the Obama administration.

“No question,” Walter said.

‘Legal Justice’

The Chamber’s request for more information on the crisis, made through the Freedom of Information Act on October 24, is part of a years-long battle between businesses and lobbying agencies for advice. votes cast on pension funds and other large funds. Clients of brokerage firms often listen to their recommendations, which give them a lot of power in voting on directors and on environmental, social, organizational, and other issues.

The SEC under Trump appointed by Jay Clayton in 2020 issued rules requiring brokerage firms to submit their votes to companies and investors at the same time. The rules also mandated brokerage firms to provide shareholders with information on companies’ disclosures of voting instructions.

Biden’s decision to appoint Gary Gensler to drop the requirements two years later led to related lawsuits from the Chamber and the National Association of Manufacturers. ISS is also challenging the SEC in court over the rules, saying they have been wrongly held back by restrictive measures for stockholders.

The Chamber asked in its FOIA letter to the SEC for “expedited processing” of its request for records on the problem, as the party’s court case continues. The group also wrote directly to Gensler on Nov. 1, asking for more information about a link between the technical error and the new brokerage rules.

The agency will take “regulatory action” if it learns that information about the rules has been harmed and not addressed publicly, Quaadman told Bloomberg Law.

“What information did they get? When did they get it? Were they able to figure it out?” Quaadman said. “It’s really foggy right now.”