U.S. Rep. Rose Leads Letter to SEC Chair Gensler Blasting SEC Changes Encouraging “Woke” Activist Shareholder Proposals
Washington, DC—Today, U.S. Representative John Rose (TN-06), a Member of the House Financial Services Committee, sent a letter to Securities and Exchange Commission (SEC) Chair Gary Gensler blasting recent misguided changes made by the Commission that enable activist investors to hijack U.S. public companies. Rep. Rose was joined in the letter by Reps. Pete Sessions (TX-17) and Bryan Steil (WI-01).
Read the full letter here.
In the letter, the Members cite a steep decline in the success rate of no-action requests – especially those related to environmental, social, and governance issues. These requests include efforts to exclude minority shareholder proposals requiring mandatory racial equity audits, greenhouse gas emissions targets, and efforts to provide access to abortion in light of the United States Supreme Court’s decision in Dobbs v. Jackson Women’s Health Organization.
U.S. Representative John Rose released the following statement:
“The SEC, under Chair Gensler, has embraced so-called ‘stakeholder capitalism’ which undermines our U.S. capital markets in favor of political activists and to the detriment of long-term investors,” said Rep. Rose. “If Chair Gensler and his pals want to change the way in which capital is allocated based on social and political whims, then they should run for elected office.”
U.S. Representative Bryan Steil released the following statement:
“Under Chairman Gensler, the SEC has encouraged the misuse of our corporate governance system to push controversial social policy,” said Rep. Steil. “This hurts Americans saving for retirement and businesses that employ workers across the country. Congress needs to hold the SEC accountable and ensure the SEC focuses on its core responsibilities of protecting investors and facilitating capital formation.”
Background:
Under U.S. securities laws, shareholders who have held stock worth at least $2,000 in market value or 1% of a company’s total stock for at least one year may submit shareholder proposals to be voted on at the company’s shareholder meeting. These include items like director elections, executive compensation, and also proposals binding on management that have increasingly been used to make companies take positions on political and social issues.
Prior to this year, the SEC had allowed companies to exclude these types of proposals from being voted on if they received permission from the commission in the form of a “no-action letter.” Under Staff Legal Bulletin 14L, issued under Chair Gensler last year, the Commission will no longer issue no action letters that permit exclusion of certain shareholder proposals that raise significant environmental or social issues, even though those issues would have been excludable in the past.