Corporate Governance

Business Roundtable v. SEC: The Battle for Access (The "Uneasy Relationship" with State Law) (Part 8A)

By J Robert Brown Jr.

In addition to the argument that the Commission erred in computing costs, Petitioners also argue that it was arbitrary to adopt access.  Its not quite an argument that the Commission failed to consider alternatives.  Its more an argument that in considering all of the alternatives, the Commission should not have adopted access.  Instead, the Commission should have opted for private ordering, allowing each company individually to resolve the access issue.

The foremost problem with the approach is Congress.  Dodd-Frank gave the SEC clear and very broad authority to adopt an access rule.  Given general awareness of the SEC's efforts with respect to access, the possibility for private ordering, and the adoption of Section 112 by Delaware, all occuring before Congress acted, it seems clear enough that in the debate over private ordering versus categorical rules, Congress left it to the SEC to resolve. 

Indeed, Petitioners have only this to say on the subject: 

• "When Congress gave the Commmission authority to adopt a proxy access rule, it permitted a limited foray in an area traditionally left to the States.  In making that foray, the Commission should have given weight to States' approach toward the rights the Commission claimed to be vindicating."

"[S]hould have given weight" really means "should have deferred to."  But Dodd-Frank effectively says otherwise. 

Assorted briefs and motions in this case can be found at the DU Corporate Governance web site.

Full post as published by The Race to the Bottom on January 27, 2011 (boomark / email).