Manufacturers Fight for Proxy Firm Curbs as Trump SEC Sits Out

A business group rebuffed claims that 2020 SEC rules improperly limited firms counseling investors on how to vote at companies’ annual meetings, as it defends the agency in court against proxy advisory firm ISS.

The Securities and Exchange Commission rules from the first Trump administration were “commonsense measures to protect investors,” the National Association of Manufacturers said in a brief filed Thursday with the US Court of Appeals for the District of Columbia Circuit.

The manufacturers group is appealing a judge’s decision to toss the regulations last year. Institutional Shareholder Services Inc. sued to stop the rules, saying the SEC overstepped its authority.

The business organization is the only challenger of the ruling following the decision by former President Joe Biden’s SEC to ditch a separate appeal. The move likely keeps President Donald Trump’s new SEC on the litigation’s sidelines as the case proceeds.

The 2020 rules included anti-fraud and public filing requirements backed by business interests. Companies long have sought to curb ISS and Glass, Lewis & Co., which control most of the proxy advice industry.

“The SEC was well within its statutory authority over the proxy process to regulate the entities that exert perhaps the greatest influence on that process,” the National Association of Manufacturers said in its brief.

An ISS spokesperson declined to comment Friday.

The filing from the manufacturers group came after ISS called on the DC Circuit to reject the business organization’s bid to save the 2020 rules. Judge Amit P. Mehta of the US District Court for the District of Columbia in February 2024 ruled the regulations were invalid.

Companies have said ISS and Glass Lewis improperly sway votes on matters such as board director elections and environmental, social, and governance proposals. The proxy firms, which advise pension funds and other large investors, have denied the claims.

The US Chamber of Commerce, former Republican-appointed SEC commissioners, and others have backed the manufacturers group on its appeal. ISS has received support from the California Public Employees’ Retirement System and other pension funds.

The DC Circuit has yet to schedule oral arguments in the case.

McDermott Will & Emery LLP represents the National Association of Manufacturers. Consovoy McCarthy PLLC and Pickard Djinis and Pisarri LLP represent ISS.

The case is Institutional Shareholder Services, Inc. v. SEC, D.C. Cir., No. 24-5105, brief filed 3/13/25.