5th Circuit nixes GOP bid to block Biden SEC proxy vote rule

By Lesley Clark | 05/13/2024 06:18 AM EDT

Republican-led states failed to show how they are harmed by new disclosure rules related to climate proposals, judges found.

The Securities and Exchange Commission (SEC) headquarters in Washington.

The SEC has said the rule, which is scheduled to go into effect July 1, will make it easier for investors to see how a company’s mutual fund voted on various shareholder proposals and compare different funds’ voting records. AP

A federal appeals court has swiftly rejected 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.

The unanimous ruling Friday from the 5th U.S. Circuit Court of Appeals, which heard arguments on the matter in late April, tossed out the lawsuit against the Securities and Exchange Commission, finding the states did not have standing to bring their case.

Texas and other states had argued that they would be harmed as investors because investment funds would pass on the costs of compliance.


But judges said in the unsigned 5th Circuit opinion that there is no guarantee that regulated parties will pass their expenses on to consumers and that the states provided “only speculation” about the possibility of increased costs to investors.