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1333SEC Will Not Appeal Proxy Access Case

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  • Baker, John
    Sep 7, 2011
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      The Securities and Exchange Commission has announced that it will not seek rehearing or Supreme Court review of the decision of the U.S. Court of Appeals for the D.C. Circuit in Business Roundtable v. SEC, which struck down the SEC's proxy access rule. Press Release 2011-179 (Sept. 6, 2011). The SEC also said that its amendments to the shareholder proposal rule, Rule 14a-8, which had been stayed pending the D.C. Circuit's decision, will take effect when the court's decision is finalized, which is expected to be September 13. Under the Rule 14a-8 amendments, shareholders will now be able to address corporate electoral procedures (including, the SEC pointed out, proxy access) in shareholder proposals that issuers are required to include in their proxy materials. However, Rule 14a-8 shareholder proposals usually are nonbinding.

      Chairman Schapiro said in a statement that she remains committed to finding a way to make it easier for shareholders to nominate candidates to corporate boards, and that she has asked the staff to continue reviewing the court's decision. Since the court's decision was based on what it said was insufficient analysis by the SEC, rather than a fundamental flaw in the rule itself, that seems to leave the door open to a reproposal of the rule. The likelihood of a reproposal in the near future, however, must be assessed in light of the many competing demands for SEC resources. The SEC's press release is available online at


      The court's analytical approach places a heavy burden on the SEC to justify its rulemaking choices and is likely to make it more difficult for the SEC to adopt rules under the Dodd-Frank Act. Several bloggers and other commentators have criticized the decision, with perhaps the most detailed critical analysis at the Race to the Bottom blog, at


      For my prior post on the decision, see


      Court documents, including party and amicus briefs, have been posted at


      John M. Baker <JMB@...>
      Stradley Ronon Stevens & Young, LLP http://www.stradley.com
      1250 Connecticut Avenue, NW, Suite 500
      Washington, DC 20036
      202.822.0140 fax
      FundLaw Listowner http://groups.yahoo.com/group/fundlaw