Washington, D.C. — Jonathan Berry, Managing Partner at Boyden Gray PLLC, delivered testimony today to the House Financial Services Subcommittee on Capital Markets. The panel held a hearing entitled “Reforming the Proxy Process to Safeguard Investor Interests.”
Drawing on his experience representing the National Center for Public Policy Research and other shareholder clients in litigation against the SEC regarding its shareholder proposal rule, Berry discussed the history of the SEC’s Rule 14a-8, and the ways in which it has enabled activist agendas contrary to the interests of retail investors.
“[T]he ‘proxy process’ is supposed to replicate, in modern and virtual form, the traditional stockholder meeting that existed in early American capitalism, where Americans with real skin in the game would attend to corporate affairs and ensure their financial interests were well represented,”testified Berry. “Today, the proxy process falls far short of this ideal. Enabled by intrusive regulations and an overly concentrated and captured financial sector, the proxy process has unfortunately become dominated by activists who use it instead to advance political, social, and environmental agendas that are often contrary to the interests of the very shareholders the process is meant to serve.”
Under Rule 14a-8, the SEC compels companies to provide activists with a platform for their agendas by requiring that companies include certain shareholder proposals in the proxy statements they send to all shareholders. Berry illustrated to subcommittee members that this rule makes“public companies the battlegrounds for contentious and polarizing issues that are properly the jurisdiction of our political branches of government.”
Berry’s testimony builds on Boyden Gray PLLC’s continued fight against efforts to impose progressive politics on American boardrooms. In April, the firm filed a lawsuit against the SEC in the U.S. Court of Appeals for the Fifth Circuit, seeking to hold the agency accountable for helping Kroger engage in viewpoint discrimination under Rule 14a-8. The Fifth Circuit agreed to a temporary stay against the SEC while the case proceeds.
Boyden Gray PLLC provides clients with strategic counsel, regulatory engagement, and impact litigation on the most difficult issues across law, public policy, and politics. The firm represents clients — including corporations, shareholders, trade associations, and individuals — in a range of industries, including energy, financial services, and healthcare.