Ross in National Review: Courts Must Ensure that SEC Rules Are Viewpoint Neutral

In most sports, referees are there to ensure that everyone is playing a fair game.

But as Michael Ross writes in National Review, the U.S. Security and Exchange Commission – the referee of the business world – is wearing one team’s colors. The agency is tasked with protecting or blocking shareholder proposals from being voted on at the shareholder meetings of publicly traded companies. Ross says that it’s been far from neutral in this role. According to Ross, the SEC has continually played favorites, greenlighting proposals that come from the left, while keeping religious and conservative proposals off the ballot:

Since 2018, the SEC has allowed corporations to keep conservative proposals off the ballot 72 percent of the time. Meanwhile, the SEC [blocks proposals] only 46 percent of time when the proposal originates from the left. It does so by relying on an exception that the SEC bestowed upon itself in 1998 that allows it to protect any proposal focusing on a “significant social policy.” This exception is malleable and subjective, and lends itself to partisan enforcement even from well-meaning SEC officials because it makes them determine whether an issue is sufficiently popular or important for shareholders to consider.

As Ross explains, the SEC’s partisan behavior is not only a failure in its role, it’s also a gross violation of shareholder’s First Amendment rights:

No government agency can gift itself complete discretion to decide which ideological positions count as “significant,” as the SEC has. The First Amendment, with few exceptions, forbids the government from favoring one opinion and discriminating against another, and the SEC’s power grab does not hold up to First Amendment standards.

That’s why, in a friend-of-the-court brief to the U.S. Court of Appeals for the Fifth Circuit, Alliance Defending Freedom urged the court to step in and get the business refs back to neutrally enforcing the rules:

Now is the appropriate time for the court to step in to put a stop to the SEC’s flagrant violation of the First Amendment. Shareholders have every right to hold the businesses they own accountable, and they deserve a fair umpire, regardless of their political persuasion. Today, the SEC’s unfair calls favor left-leaning causes. But political winds change. Tomorrow, the SEC could favor another team. That’s why it’s better for everyone that the SEC returns to viewpoint neutrality in its rules and decision-making.

Read the full article here.