SEC throttling conservative, religious shareholders based on viewpoints

WASHINGTON – Alliance Defending Freedom submitted a friend-of-the-court brief Friday in National Center for Public Policy Research v. Securities and Exchange Commission asking the court to hold the SEC accountable for engaging in viewpoint discrimination against religious shareholders of publicly traded companies.

Filed with the U.S. Court of Appeals for the 5th Circuit, the ADF brief explains that the court should provide constitutionally required guardrails on SEC rulemaking and application, which in recent years has been abused to censor religious shareholder proposals based on viewpoint.

“Americans count on the SEC to be a viewpoint-neutral referee, but officials are showing up wearing one of the team’s jerseys,” said ADF Senior Counsel and Senior Vice President for Corporate Engagement Jeremy Tedesco. “As a government agency, the SEC is bound by the First Amendment. It can’t pick and choose which viewpoints get a hearing in the public square. Every shareholder deserves a voice—not just those who happen to agree with the government’s current views on a hot-button issue.”

Courts require “narrow, objective, and definite” limitations to protect viewpoint neutrality when government officials have the power to grant or deny “prior permission,” as with shareholder proposals. But the SEC has created its own “significant social policy” test to determine which proposals reach ballots at annual shareholder meetings. As the ADF brief points out, since 2018, the SEC has allowed corporations to keep conservative proposals off the ballot 72% of the time—26% more frequently than those originating from progressive viewpoints.

Although the SEC denied requests from JPMorgan Chase and PayPal to keep shareholder resolutions on viewpoint diversity off the 2023 ballots, the agency’s decision to grant similar requests to multiple companies—including Kroger, American Express, Apple, Alphabet, and Walgreens—prompted a lawsuit from the National Center for Public Policy Research and other individual shareholders.

As the ADF brief underscores, the SEC’s targeting of proposals from NCPPR is part of a larger trend of viewpoint-based censorship where “the SEC greenlights ESG proponents’ submissions while screening ‘disfavored subjects’ important to religious shareholders.” ADF cites 13 issues the SEC deemed “significant social policy” that originated from progressive viewpoints—including the effect of state abortion laws on stakeholders and animal rights—while the SEC consistently ruled that companies could ignore proposals on topics like viewpoint discrimination in employment and limiting customer speech, issues of intense interest to religious shareholders.

“People of faith are not second-class citizens,” said ADF Legal Counsel Michael Ross. “The SEC’s decision-making processes favor progressive causes today, but political winds change. That’s why it’s important to everyone that the SEC stick to viewpoint neutrality in its rules and decision-making. We’re optimistic that the court will provide this much needed correction to the SEC.”

Alliance Defending Freedom is an alliance-building, non-profit legal organization committed to protecting religious freedom, free speech, parental rights, and the sanctity of life.

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