Client Alert
U.S. Court of Appeals Rejects SEC Proxy Access Rule
July 28, 2011
Last week, in a ruling applauded by business groups, the U.S. Court of Appeals for the District of Columbia Circuit issued an opinion rejecting and vacating the Securities and Exchange Commission’s landmark shareholder proxy access rule. Rule 14a-11 under the Securities and Exchange Act of 1934, adopted in August 2010 by a bitterly divided 3-2 SEC vote after years of controversy, was intended to facilitate the rights of shareholders to nominate directors of corporate boards. However, in September 2010, the Business Roundtable and the Chamber of Commerce of the United States of America filed a petition for review with the Court challenging the rule, and in October 2010 the SEC agreed to stay the effectiveness of the rule pending the Court’s decision. In its decision last week, the Court held that the SEC acted “arbitrarily and capriciously” and failed to adequately assess the economic effects of the new rule.
Click here to read our client alert discussing the recent ruling.
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