Bloomberg News

U.S. Appeals Court Rejects SEC Proxy Access Regulations

July 22, 2011

(Updates with excerpt from ruling in fourth paragraph.)

July 22 (Bloomberg) -- A U.S. Securities and Exchange Commission rule making it easier for shareholders to oust board members was rejected by a federal appeals court.

The U.S. Court of Appeals in Washington today agreed with the U.S. Chamber of Commerce and the Business Roundtable that the SEC failed to study the cost of fighting a challenge from shareholders.

The rule, which was mandated by the Dodd-Frank financial- regulatory overhaul enacted last year, would have allowed investors or shareholder groups that own at least 3 percent stock for three years to put their own board nominees on proxy statements.

“The commission inconsistently and opportunistically framed the costs and benefits of the rule; failed adequately to quantify the certain costs or to explain why those costs could not be quantified; neglected to support its predictive judgments; contradicted itself; and failed to respond to substantial problems raised by commenters,” U.S. Circuit Judge Douglas Ginsburg wrote for the three-judge panel.

Kevin Callahan, an SEC spokesman, had no immediate comment on the ruling.

The case is Business Roundtable v. Securities and Exchange Commission, 10-1305, U.S. Court of Appeals, District of Columbia (Washington).

--With assistance from Joshua Gallu and Jesse Hamilton in Washington. Editors: Andrew Dunn, Mary Romano

To contact the reporter on this story: Tom Schoenberg in Washington at

To contact the editor responsible for this story: Michael Hytha at

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