Tag: U.S. Chamber of Commerce
Chamber files motion to vacate SEC’s final share repurchase rule
On October 31, the Fifth Circuit issued an opinion in Chamber of Commerce of the USA v. SEC, granting the Chamber’s petition for review of the SEC’s Share Repurchase Disclosure Modernization rule. The Court held that the “SEC acted arbitrarily and capriciously, in violation of the APA, when it failed to respond to petitioners’ comments and failed to conduct a proper cost-benefit analysis.” However, recognizing that there was “at least a serious possibility that the agency will be able to substantiate its decision given an opportunity to do so,” the Court decided that, “short of vacating the rule,” it would put the rule on life support, allowing the SEC 30 days “to remedy the deficiencies in the rule,” and remanded the matter with directions to the SEC to correct the defects in the rule. The three-judge panel, however, “retain[ed] jurisdiction to consider the decision that is made on remand.” The deadline was set at November 30, 2023. On November 22, the SEC announced that it had issued an order postponing the effective date of the Share Repurchase Disclosure Modernization rule. As a result, the rule was stayed pending further SEC action. (See this PubCo post.) On the same date, the SEC filed a brief motion asking the Court for an extension of time to correct the defects. In its motion, the SEC said only that, “[s]ince the remand, the Commission’s staff has worked diligently to ascertain the steps necessary to comply with the Court’s remand order and has determined that doing so will require additional time.” The SEC said in the motion that it would provide an update within 60 days on the status of its efforts. Not surprisingly, the Chamber opposed the motion. On November 26, the Court issued an Order, refusing to grant the extension, and on December 1, the SEC’s Office of General Counsel submitted a letter to the Court advising that the SEC would not be able to correct the defects by the Court-imposed deadline. (See this PubCo post, this PubCo post, this PubCo post and this PubCo post.) Today, the Chamber filed a motion to vacate the SEC’s final share repurchase rule. As recounted by the Chamber, the SEC advised the Chamber that it took no position on the Chamber’s motion. Will the Court now pull the plug on the repurchase rule?
Fifth Circuit denies SEC request for more time to cure defects in share repurchase rule
You might recall that, on Halloween, the Fifth Circuit issued an opinion in Chamber of Commerce of the USA v. SEC, granting the Chamber’s petition for review of the Share Repurchase Disclosure Modernization rule. The Court held that the “SEC acted arbitrarily and capriciously, in violation of the APA, when it failed to respond to petitioners’ comments and failed to conduct a proper cost-benefit analysis.” However, recognizing that “there is at least a serious possibility that the agency will be able to substantiate its decision given an opportunity to do so,” the Court decided that, instead of vacating the rule, it would allow the SEC 30 days “to remedy the deficiencies in the rule,” and remanded the matter with directions to the SEC to correct the defects in the rule. The three-judge panel, however, “retain[ed] jurisdiction to consider the decision that is made on remand.” The deadline was set at November 30, 2023. On Wednesday before Thanksgiving, the SEC announced that it had issued an order postponing the effective date of the Share Repurchase Disclosure Modernization rule. As a result, the rule was stayed pending further SEC action. (See this PubCo post.) Also on Wednesday, the SEC filed a brief motion asking the Court for an extension of time to correct the defects. Not surprisingly, the Chamber opposed the motion. On Sunday, the Court issued an Order, refusing to grant the extension. What’s next?
SEC postpones effective date of share repurchase rule
Today, the SEC announced that it had issued an order postponing the effective date of the Share Repurchase Disclosure Modernization rule. As a result, the Rule is stayed pending further SEC action. Why? You might recall that, on Halloween, the Fifth Circuit issued an opinion in Chamber of Commerce of the USA v. SEC, granting the Chamber’s petition for review of the final share repurchase rule and remanding to the SEC “to correct the defects” that the Court had identified. The deadline was set at November 30, 2023. Under the Administrative Procedure Act, the SEC observed, an agency may “postpone the effective date of action taken by it” pending judicial review when it finds that “justice so requires.” According to the SEC, in light of the Fifth Circuit’s decision, the SEC found that it was “consistent with what justice requires to stay the effectiveness of the Repurchase Rule pending further Commission action.” Will the SEC ultimately repair the defects to the satisfaction of the Court? Will the Court ultimately vacate the rule? That all remains to be seen.
Happy Thanksgiving!
Fifth Circuit grants Chamber’s petition for review of buyback rule—will the Court ultimately vacate the rule?
In May this year, the SEC adopted final rules intended to modernize and improve disclosure regarding company stock repurchases. The rule requires quarterly reporting of detailed quantitative information on daily repurchase activity and revises and expands the narrative requirements, including disclosure regarding the rationale for the buyback. (See this PubCo post.) It didn’t take long for the Chamber to object. Just over a week following adoption, the U.S. Chamber of Commerce, along with two Texas co-plaintiffs, submitted a petition to the Fifth Circuit for review of the final rule. Petitioners made three arguments: that “(1) the rationale-disclosure requirement violates the First Amendment by impermissibly compelling their speech; (2) the SEC acted arbitrarily and capriciously in adopting the final rule by not considering their comments or conducting a proper cost benefit analysis; and (3) the SEC did not provide the public with a meaningful opportunity to comment.” On Halloween, the three-judge panel issued its opinion. The Court granted the petition, holding that the SEC violated the Administrative Procedure Act. But the Court did not vacate the rule—not yet anyway. Instead, the Court remanded the rule back to the SEC for 30 days to attempt to repair the analytical defects. Will the SEC adequately repair the defects? Will the Court ultimately vacate the rule? That all remains to be seen.
Chamber sues SEC over share repurchase rules
On Friday, the U.S. Chamber of Commerce announced that, together with the Texas Association of Business and the Longview Chamber of Commerce, it had filed litigation in the Fifth Circuit against the SEC to prevent implementation of the SEC’s new rulemaking about stock buybacks (see this PubCo post). According to the press release, the lawsuit challenges the SEC’s rule under the Administrative Procedure Act and the Constitution: the SEC’s “mandatory disclosure requirements not only risk the public airing of important managerial decisions but also compel speech in violation of the First Amendment.” The Chamber has been openly hinting at this course of action (see this press release), so it’s not much of a surprise. The initial filing is in the form of a petition, simply asking the court to review the order of the SEC approving the final rule, Share Repurchase Disclosure Modernization, entered on May 3, 2023.
SEC proposes new resource extraction disclosure rules — will they face another legal challenge?
by Cydney Posner This morning, the SEC voted (with Commissioner Piwowar in dissent) to propose rules, mandated by Section 1504 of the Dodd-Frank, that would require disclosure on Form SD of certain payments made to the federal and foreign governments by resource extraction issuers in connection with commercial development of oil, […]
U.S. Chamber of Commerce won’t challenge pay-ratio rules — at least for now — and will focus instead on conflict minerals challenge
by Cydney Posner The WSJ is reporting that, contrary to all expectations (including my own), “the U.S. Chamber of Commerce isn’t planning to mount a legal challenge to the Securities and Exchange Commission’s pay ratio rule.”
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