SEC Sued Over New Corporate Proxy Rules

September 30

A suit has been filed against the SEC in regards to new rules passed imposing regulations on American companies. The SEC adopted rules on August 25^th requiring companies to include in their proxy materials the nominees of “significant, long-term shareholders.” The rules are designed to allow shareholders to exercise their traditional rights to nominate and elect members of company boards of directors. However, a suit was filed Wednesday by the U.S. Chamber of Commerce and the Business Roundtable against these rules, claiming a violation of the Investment Company Act, the Securities Exchange Act, the Administrative Procedure Act as well as various issuers’ rights under the fifth and first amendments. The allegations are that the SEC did not consider the costs these rules will impose on companies, and by extension shareholders and workers. Also, they claim that they will lead to costly election contests, and the SEC is guilty of “arbitrary and capricious” treatment of state law.

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