Attor­ney Gen­er­al Ken Pax­ton Defends State Law Pro­tect­ing Tex­ans from Proxy Advi­sors Push­ing Woke Ideology

Attorney General Ken Paxton is defending a new Texas state law that requires proxy advisors to disclose when they're pushing left-wing goals as opposed to making recommendations based solely on financial considerations.

S.B. 2337 was passed by the Texas Legislature and is set to go into effect on September 1. The law requires proxy advisors, who provide voting recommendations to investors and shareholders in companies, to make recommendations solely on financial considerations or provide a detailed explanation when they provide recommendations based on other considerations.

The new rule would apply to recommendations if they are made in regards to companies based in Texas. S.B. 2337 would prevent companies from secretly trying to push a woke agenda in corporate America by forcing them to disclose if their motivations are aimed at promoting political goals, including DEI and ESG.

"The role of a proxy advisor is to provide sound guidance based on financial considerations, not use their position to promote woke, left-wing ideology," said Attorney General Paxton. "S.B. 2337 stops liberal activists posing as proxy advisors from giving guidance based on their ideological goals without making that clear to their clients. The new law is critical for promoting transparency in corporate America, and I will continue to defend it aggressively in the courts."

Proxy advisory firms Glass Lewis and Institutional Shareholder Services ("ISS") have sued to prevent the implementation of S.B. 2337.

Most recently, Attorney General urged the court to dismiss Glass Lewis' lawsuit and fought back against the company's attempt to secure a preliminary injunction against the new law. Additionally, Attorney General Paxton is fighting to dismiss ISS's lawsuit and stop the corporation's attempt to secure a preliminary injunction against the new law.