Four states, Utah, West Virginia, Texas and Louisiana, have sued the SEC

Four states, Utah, West Virginia, Texas and Louisiana, have sued the SEC about the new rule that requires certain investment funds to reveal more about how they vote on shareholder ballots, including on pay packages for top executives.

The new rule will put shareholders at increased risk of loss, encouraging political activism and raising administrative costs, according to the office of Utah’s attorney general, as reported by Reuters.

In addition to disclosures on voting on executive pay, the rule the commission adopted in November requires mutual funds, exchange-traded funds and others to produce more comprehensive and machine-readable information.

The new rules require companies to disclose any agreements or understandings that the target company has with its own named executive officers or those of the company that is acquiring the target company (called the acquiring company), as well as any relationships between the acquiring company and its named executive officers and those of the target company. Such disclosures must include the total of all compensation that may be paid or become payable to, or on behalf of, the named executive officer, and the conditions upon which it may be paid or become payable, per the SEC.

The Say-on-Pay, frequency, and golden parachute votes are advisory rather than binding. The DoddFrank Act specifies that the shareholder vote to approve executive compensation “shall not be binding on the issuer or the board of directors of an issuer," per the SEC.