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Business Groups Challenge SEC Proxy Access Rule in Federal Appeals Court

By Jim Hamilton

The US Chamber of Commerce and the Business Roundtable have asked a federal appeals court to invalidate the recently adopted SEC proxy access rule, Exchange Act Rule 14a-11. In a petition to the US Court of Appeals for the District of Columbia, the business groups said that Rule 14a-11 is arbitrary and capricious, violates the Administrative Procedure Act, and was adopted without a proper assessment of its effect on efficiency, competition, and capital formation. The petition also asserts that the rule violates company rights under the First and Fifth Amendments. At the same time, the business groups asked the SEC to stay the rule's effect until the litigative challenge is resolved. While the Dodd-Frank Act specifically authorized the SEC to adopt the proxy access rule in an effort to insulate the SEC from a challenge to its rulemaking authority, the business groups said that the Dodd-Frank provision does not exempt the SEC from following the law when it conducts rulemaking.

Full post as published by Jim Hamilton's World of Securities Regulation on September 30, 2010 (boomark / email).