Today, a three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit unanimously vacated the SEC’s proxy access rules. The rules, which are explained in this WSGR Alert1, would have given public company shareholders the right, under certain circumstances, to require the company to include in its proxy statement and on its proxy card shareholder nominees for a portion of the seats on the board of directors. The SEC had stayed the effectiveness of the rules pending the court’s decision in the case.

The court’s decision, which is available online2, held that the SEC:

acted arbitrarily and capriciously for having failed once again . . . adequately to assess the economic effects of a new rule. Here 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.