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Sean D. Reyes
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Utah Sues SEC Over ESG Proxy Disclosure Rule

February 23, 2023

Utah Attorney General Sean D. Reyes filed a lawsuit against the Securities Exchange Commission (SEC) opposing a new proxy disclosure rule that would increase activism, administrative costs, and shareholders’ risk of loss. Texas, Louisiana, and West Virginia also joined in the lawsuit.  

Utah outlined its concerns with the rule when it filed comments with the SEC in December 2021. The rule creates new reporting categories of proxy votes for registered management investment companies. But investors already have access to detailed information about proxy votes. Instead, the required information will be used by activists to increase their leverage to advance politicized proposals unrelated to investors’ economic interests. Specifically, in the Environmental, Social, and Governance (ESG) realm, investment firms are disguising social causes and political goals as objectively advancing shareholder value.

Fund advisers are legally bound first and foremost by their duty to the investors. The voting pressures that will result from the new rule will lead to decisions that undermine the primary responsibility of maximizing investors’ return on their investments.  

Read the filed lawsuit here.