The House Appropriations Committee on June 24, 2022, passed a fiscal 2023 financial services budget that would fund the SEC at $2.15 billion. The U.S. Chamber of Commerce was unsuccessful in its request that the panel include language blocking the SEC from implementing universal proxy ballot requirements and corporate political spending disclosure rules.
By a vote of 31 to 22, the committee approved the Financial Services and General Government (FSGG) bill for the fiscal year beginning in October, which includes the SEC funding.
The FSGG bill has often served as a vehicle by which Congress seeks to shape the SEC’s rulemaking. Included in the measure was a provision barring the SEC from using any of the funding to implement Trump-era rules in Release No. 34-89372, Exemptions from the Proxy Rules for Proxy Voting Advice, which placed new restrictions on proxy firms such as Institutional Shareholder Services Inc. (ISS) and Glass Lewis & Co.
The appropriations panel at the same time ignored a call by the Chamber to block SEC rules favored by progressives and investor advocates.
The commission in November 2021 voted to issue Release No. 34-93596, Universal Proxy, requiring a universal proxy card that would allow shareholders voting by proxy to pick and choose from a mix of dissident and company-backed board nominees. (See In a Win for Shareholders, SEC Adopts Universal Proxy in the November 18, 2021, edition of Accounting & Compliance Alert.)
The chamber, in a June 22 letter to the committee, wrote that it “strongly supports prohibiting the SEC from developing, implementing, finalizing, or enforcing universal proxy ballot proposals, and prohibiting any SEC rulemaking to allow or explore universal proxy ballots.”
The chamber also backed maintaining the prohibition in the current year budget on the SEC issuing corporate political spending disclosure rules. (See Budget Deal Preserves Ban on SEC Political Spending Disclosure Rule in the March 10, 2022, edition of Accounting & Compliance Alert.)
The FSGG budget approved on June 24 did not include that prohibition, nor did it include any universal proxy restrictions.
The SEC plans to use the funding to add 400 new positions, 65 of which would go toward the commission’s Division of Corporation Finance (CorpFin), according to a budget justification document released in late March. The vast majority of those CorpFin hires would be put toward the Disclosure Review Program “to assist with review of the significant increase of IPO and SPAC filings, provide more robust review of registration statements, and provide prompt and thorough responses to registrants,” with the rest supporting commission rulemakings.
This article originally appeared in the June 28, 2022 edition of Accounting & Compliance Alert, available on Checkpoint.
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