SEC suffered another defeat in court, as the Fifth Circuit Court of Appeals ruled against the agency in its legal clash with the National Association of Manufacturers.
Under the leadership of Gary Gensler, the SEC attempted to halt a 2020 rule targeting proxy advisory firms, only to be rebuffed by the court for violating federal regulatory guidelines.
Since assuming leadership at the SEC, Gary Gensler has been embroiled in numerous legal battles against private enterprises, experiencing mixed outcomes. Recently, however, losses have accumulated, notably failing in attempts to rescind a 2020 rule extending the SEC’s oversight to proxy advisory firms.
The saga began in July 2020 when the SEC, under former chair Jay Clayton, broadened its supervision to include proxy advisory firms. These entities play a crucial role in capital markets by gathering board proposal information and advising shareholders on voting decisions.
Recognizing their influence, the SEC justified its oversight to safeguard against manipulation, obtaining federal authorization in 2020.
With Gensler assuming leadership, he promptly ordered a review of the 2020 rule, aiming to repeal it. This triggered legal battles, prominently led by the National Association of Manufacturers opposing the SEC’s attempt to relax oversight.
The ongoing legal feud escalated to the Fifth Circuit Court of Appeals in New Orleans, which recently ruled against the SEC, marking another setback for Gensler.
The court found fault with the SEC’s attempt to repeal the proxy advisory firm rule without adhering to the Administrative Procedure Act, pinpointing Gensler’s direct involvement in this unauthorized maneuver.
Linda Kelly, Chief Legal Officer of NAM, remarked on the ruling, emphasizing the importance of federal agencies abiding by the law across changing administrations. She criticized the SEC’s decision to rescind the 2020 rule as neglecting its duty to maintain stable regulation in the capital markets.
This defeat adds to a series of setbacks for Gensler, not only concerning proxy rules but also extending into other contentious areas such as cryptocurrency. In February, a federal court in Washington, D.C., deemed Gensler’s effort to amend proxy rules unlawful, highlighting broader challenges he faces in regulatory battles.
Notably, Gensler’s tenure has been defined by the high-stakes Ripple lawsuit, questioning whether XRP qualifies as a security. Despite setbacks, including scaled-back demands and dismissals of cases against Ripple executives, Gensler continues to pursue significant penalties in this landmark case.
The outcome of the Ripple lawsuit looms large over Gensler’s tenure, potentially shaping his legacy amid mounting scrutiny from lawmakers and industry insiders. Meanwhile, the XRP community endures amidst market fluctuations, remaining a prominent player despite recent challenges.
At present, XRP trades at $0.479, showing a 1.77% increase in the past day with a market capitalization of $26.67 billion.
