In a somewhat surprising development, on October 7, 2026, the Securities and Exchange Commission’s Division of Enforcement (the “Division”), in consultation with the Division of Corporation Finance, published an investigation report (the “Report”) pursuant to Section 21(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), detailing its investigations into certain members of Climate Action 100+ (“CA100”), “an investor-led organization that uses shareholder proxy voting to exert influence on public companies with respect to their climate policies.” Specifically, the Division investigated whether such CA100 members formed a “group” pursuant Sections 13(d)(3) and 13(g)(3) of the Exchange Act, which would have resulted in them losing their ability to report beneficial ownership on Schedule 13G, instead requiring them to report on Schedule 13D, which is longer and more complex, with more frequent amendments. 

Among other things, the Report argues that formation of a group may be implied through coordinated investor action, including through intermediaries, and investors must “proactively ensure policies aimed at avoiding group formation are adequately enforced.” based on the activities disclosed in the Report, but instead issued the Report to make sure that asset managers and investors that are considering joining organizations like CA100 “take appropriate steps to ensure compliance with the Exchange Act.”

Factual Background

The members of CA100, which is supported by the Ceres investor network, include investors and asset managers.  The group promotes members’ engaging with companies to pursue certain climate-related goals, such as strengthening climate‑related financial disclosures, through “coordinated engagement and proxy‑voting signals.”  This includes “flagging” certain proposals as aligned with group goals, as well as designating investors to submit shareholder proposals, and, in some cases, sponsor proxy campaigns for dissident directors.  In addition, the Report contends that, on occasion, certain parties affiliated with CA100 used negative publicity about climate-related commitments, as well as direct phone calls and meetings, to attempt to influence other members’ voting decisions. The activities discussed in the Report arose in connection with an activist investor-led campaign to elect a slate of dissident directors at ExxonMobil Corporation (“ExxonMobil”) in 2021.

What Does This Mean?

In the Report, the Division addressed two separate questions:

  1. When might coordinated conduct by investors result in the formation of a “group”? 
    1. Based on the Report, “coordinated conduct [between investors and/or through an intermediary] can function, in practice, as an ‘agreement, arrangement, understanding, or concerted action’ toward a common purpose in the holding ̶ ̶ and by extension, the voting ̶ ̶ of an issuer’s securities,” potentially triggering the formation of a group and requirement to file a Schedule 13D.  Further, “coordination of voting at any issuer’s annual meeting through an intermediary, along with additional evidence, such as the intermediary’s promotion of negative media coverage for a shareholder who joined the intermediary and whose votes do not align, may serve as indicia that a group had formed.”  This is true even where members publicly recognize the regulatory ramifications of agreeing to buy, sell, hold, or vote shares together, and simultaneously publicize their intent to make independent voting decisions so as to clarify that they are not a group and so not subject to such regulatory requirements
    2. Where an intermediary coordinates its members’ voting decisions on specific proposals, including by “flagging” important votes and influencing members to support its views through negative publicity and/or other forms of pressure, such “efforts can operate as indirect channels through which the members act with a common purpose in the holding of securities.”
    3. Clear and specific efforts, either public or internally, to delineate independence from group voting decisions, such as “[a] disclaimer by a member of the organization regarding its potential participation in a “group” would not prevent the formation of a group if, despite such a disclaimer, the evidence shows the existence of an explicit or implicit agreement among the organization’s members.”  This differs from incidental or coincidental conduct from parties that share interests but are not in any way coordinating efforts.
    4. If investors provide funding to an intermediary, this arrangement with the intermediary may be deemed a scheme to evade disclosure under Exchange Act Rule 13d-3(b) “if the investors entered into the arrangement with the intent to create a false appearance regarding their coordinated activities and efforts to influence control of a specific issuer. Under those circumstances, any shares held by the intermediary may be attributed to the contributing investors (or vice versa).”
    5. Where investors pay dues or contribute other unrestricted funds to an organization, and these funds can be used for a proxy solicitation, such investors may unwittingly become participants in the solicitation for purposes of Schedule 14A. This, in turn, may trigger a disclosure obligation under Item 4 of Schedule 14A, which requires disclosure of any “participant” in a solicitation, regardless of whether the financial support is transferred directly to an intermediary or to the intermediary through others. As discussed in the Report, shareholders have a right to know and understand who is trying to impact their proxy voting decisions, whether directly or indirectly. 

Continue reading.