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Chloe Chung is an associate in the Business Trial Practice Group in the firm's Century City office.

The United States Court of Appeals for the District of Columbia Circuit recently held that the Securities and Exchange Commission (“SEC”) and the securities industry were effectively “separated by a common language.” Giving heed to the plain meaning rule when interpreting legislative intent, the Court in Institutional Shareholder Services, Inc. v. SEC, No. 24-5105, —F.4th —, 2025 WL 1802786 (D.C. Cir. July 1, 2025), affirmed an order of the United States District Court for the District of Columbia (see Institutional Shareholder Services, Inc. v. SEC, 718 F. Supp. 3d 7 (D.D.C. 2024)), granting summary judgment to plaintiff Institutional Shareholder Services, Inc. (“ISS”), holding that the SEC’s definition of the term “solicit” went beyond the meaning Congress contemplated when enacting Section 14(a) of the Securities and Exchange Act of 1934 (“Exchange Act”). The decision analyzed the SEC’s 2020 amendment to its rules regulating proxy advice to define the term “solicit” / “solicitation” to include the provision of client requested proxy voting advice (“2020 Rule”). The Court struck down the 2020 Rule as unlawful, reasoning that the meaning of “solicit” as Congress intended when it enacted the Exchange Act is to actively seek to obtain proxy authority or votes. The Court concluded that “the ordinary meaning of ‘solicit’ does not include entities that provide proxy voting recommendations requested by others, even if those recommendations influence the requestors’ eventual votes.” Proxy advisory firms like ISS were therefore in the clear when it comes to Section 14(a).Continue Reading Plain Speaking Wins the Day at the D.C. Circuit: Proxy Advisors Are Not Subject to SEC Section 14(a) Solicitation Prohibition Rule

In Crest v. Padilla, No. 20STCV37513 (Cal. Super. Apr. 1, 2022), the Superior Court of California for the County of Los Angeles (Green, J.) declared that Section 301.4 of the California Corporations Code is unconstitutional under the California state Constitution.  Section 301.4 requires publicly held corporations which have their principal executive offices located in California to include “underrepresented communities” on their boards of directors.  The trial court granted the taxpayer plaintiffs’ motion for summary judgment, concluding that the statute violated equal protection clause of the California Constitution.  The court’s decision renders the constitutionality of Section 301.4 ripe for appellate review by the California Court of Appeal.
Continue Reading Los Angeles Superior Court Invalidates California Board Diversity Statute, Rendering It Ripe for Review by the California Court of Appeal