On July 1, 2025, a federal court of appeals held that the SEC's regulation of proxy advice exceeded its authority and the SEC's 2020 proxy advisor regulations are not valid. The court closely tracks the district court's decision, holding that "solicitation" and "solicit," as commonly understood and as used in Section 14 of the Exchange Act, do not include advising individuals who ask for advice on proxy voting. Accordingly, the SEC lacks authority under Section 14 to enact rules that apply to proxy advice.
With a dearth of meaningful federal regulation, we can expect states to try to fill the void. In fact, it has already started with Texas' recently-passed legislation that will require proxy advisors to accompany much of their advice with proof of the economic link to shareholder value. See our Commentary here.
To the extent additional states pass similar legislation and a patchwork of regulation emerges, the landscape of proxy voting is likely to become increasingly complex for companies, institutional investors and proxy advisors alike.
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