CHARLESTON — West Virginia Attorney General Patrick Morrisey this week joined his colleagues in Louisiana, Texas and Utah in urging the United States Court of Appeals for the Fifth Circuit to review a Securities and Exchange Commission rule that requires investment managers to make more disclosures about their proxy votes.
Morrisey and the other AGs say the new disclosures force investment managers to focus on "woke progressive social agenda, specifically involving climate change — environmental, social and governance or ESG — equity and inclusion, among other things."
“The Biden administration will stop at nothing to advance their far-left climate agenda,” Morrisey said in a press release. “There are already existing rules about proxy vote disclosures, and this administration wants to pile on even more that have nothing to do with the economic value of investments.
Morrisey
“It’s another attempt to further their woke climate agenda at the expense of hard working Americans’ retirement accounts.”
As Morrisey explains it, when a person invests in a retirement account or mutual fund, that individual doesn’t get to cast votes as to all the companies in which the fund invests. Instead, the asset-management company that runs the fund casts the votes, acting as “proxy” on behalf of its investors.
The existing rule requires investment managers to disclose their policies for casting these proxy votes and how they’ve voted in the past. Under the recent SEC rule, investment managers must sort their proxy votes into several different categories of information the SEC thinks are important, including progressive social concerns such as climate, human rights and diversity, equity and inclusion.
Morrisey says this scenario would make it easy for activists to pressure investment managers to vote a certain way to advance a politically charged agenda.
He also says this rule would create more costs for the funds and those costs will be passed on to investors in the form of management fees, which would mean lower returns for individual investors.
The case is styled State of Texas, State of Louisiana, State of Utah and State of West Virginia v. Securities and Exchange Commission.
United States Court of Appeals for the Fifth Circuit case number 23-60079