5th Circuit grills challengers of SEC proxy vote rule

By Lesley Clark | 05/01/2024 06:53 AM EDT

A judge asked Texas if it is “really all that difficult” for companies to comply with disclosure requirements related to shareholder climate proposals.

SEC seal on building.

Securities and Exchange Commission headquarters in Washington. Andrew Harnik/AP

A federal appeals court appears likely to toss out a Republican-led challenge to a Biden administration requirement for investment managers to reveal more information about how they oversee funds and handle climate proposals from shareholders.

During oral arguments Tuesday, judges of the 5th U.S. Circuit Court of Appeals questioned whether the Securities and Exchange Commission proxy vote disclosure rule rises to the level of a change that will raise costs for investors.

Texas, Louisiana, Utah and West Virginia filed suit last year, claiming that the regulation could increase climate activism and make investing more expensive. Texas Attorney General Ken Paxton had argued that the rule would change reporting requirements by expanding the number of voting categories that address “left-wing priorities.”


But judges of the 5th Circuit asked if the Republican-led states could provide evidence that any costs would be incurred to disclose the information and whether those costs would be passed on to investors.