Back in August, the House Committee on the Judiciary sent a request for documents to shareholder activist group As You Sow alleging that the group “appears to facilitate collusion that may violate U.S. antitrust law”. As You Sow ultimately declined to produce the requested documents and instead questioned the Committee’s authority in requesting them. This led the Committee to fire another volley on November 1st in the form of a subpoena. The letter accompanying the subpoena stated:
“As You Sow’s response without compulsory process has been inadequate. To date, three months after the Committee’s initial requests, As You Sow has not produced a single document in response to the Committee’s requests. Further, As You Sow has made clear that it does not intend to comply voluntarily with the Committee’s requests.”
Moving to a compulsory discovery process is one step closer to litigation, but it is important to put this into a greater context. Notably, the Committee cannot bring about any litigation itself, the subpoena is only for the purposes of evaluating the current regulatory landscape. However, any findings from the subpoena could potentially be handed off to another party, like a state Attorney General, to bring litigation.
As Carsten Reichel discussed in our panel on Anti-ESG at the PracticalESG.com Conference in September, an investigation – even a subpoena – is a long way from a concrete enforcement action. Even with that in mind, it is difficult not to be a little nervous when a government entity makes their request compulsory.
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