Lawsuit Challenges SEC’s Weakening Of Rule 14a-8

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Lawsuit Challenges SEC’s Weakening Of Rule 14a-8
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Our work to challenge SEC’s changes to Rule 14a-8 that would weaken corporate accountability

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Q2 2020 hedge fund letters, conferences and more

Dear Friends,

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Digital Payment SystemShould you invest in cryptocurrencies? As with all investments, it depends on many factors. At the Morningstar Investment Conference on Thursday, Matthew Hougan of Bitwise, Tyrone Ross, Jr. of Onramp Invest and Annemarie Tierney of Liquid Advisors joined Morningstar's Ben Johnson to talk about portfolio allocations to cryptocurrencies. Q2 2021 hedge fund letters, conferences and Read More

We hope you are all keeping well and safe.

Since 2017, the current Administration has been systematically dismantling existing regulations meant to promote corporate accountability on the environment, our financial system, healthcare, labor, and so many other critical issues.

SEC's Proposed Changes To Rule 14a-8

As you know, as part of this de-regulatory agenda, the Securities and Exchange Commission (SEC) has proposed changes to Rule 14a-8 which governs investors' access to corporate proxies through the filing of resolutions. These changes threaten to weaken corporate accountability structures and diminish our ability as shareholders to advocate for improved performance on the most pressing issues affecting people and planet today. More recently the Department of Labor proposed changes to the Employee Retirement Income Security Act (ERISA) which would significantly impede ESG investing strategies.

These proposed rule changes and the corporate lobbying driving it are part of a long-term campaign by pro-business groups -- including the US Chamber of Commerce and the Business Roundtable -- to shut down corporate engagement by investors on ESG matters. Some of our longer term members will recall that we successfully defeated a similar challenge to Rule 14a-8 back in 2007.

Together With Our Allies We Have Been Pushing Back

  • ICCR and the Shareholder Rights Group developed case studiesto accompany a comment letter filed jointly last  week by Ceres, the Council of Institutional Investors, ICCR, The Shareholder Rights Group, Si2 and US SIF citing fresh evidence from the 2020 proxy season demonstrating how the proposed rule-change will inhibit shareholders' ability to file ESG-related proposals. You can read the related press release here.
  • ICCR's letter with 138 member signatories regarding the Department of Labor’s proposed rule “Financial Factors in Selecting Plan Investments” which would impose significant analytical and documentation burdens on fiduciaries of benefit plans governed by the Employee Retirement Income Security Act (“ERISA”) wishing to select (or allow individual account holders to select) investments that use ESG factors in investment analysis, or that provide ESG benefits.
  • As companies were forced by COVID 19 to move their annual shareholder meetings to an online format, ICCR and the Shareholder Rights Group developed a Statement on Shareholder Participation and Virtual Annual Meetings with best practice guidelines for future meetings, to avoid the technical and practical challenges and limitations of the virtual-only meeting format. You can read the follow up letter on this topic sent to the SEC in early July by ICCR, the Shareholder Rights Group, CII, Ceres and US SIF here.

The campaign has caught the attention of the press, and our efforts have been featured in Bloomberg, Barron's and CQ Roll Call, among other outlets.

While we expect the SEC to implement these rule changes changes shortly, as we did in the 2007 fight, we remain hopeful that our efforts will ultimately prove successful.

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Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver

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