After spending forever writing a proxy access rule, the SEC took it to the D.C. Circuit, where it got a serious beating in a not that great opinion. It looks like the next step is not going to be an appeal, or en banc, but spending forever, again, writing a new proxy access rule. Here's DealBook: "I want to be sure that we carefully consider and learn from the court's objections as we determine the best path forward," Mary L. Schapiro, the agency's chairwoman, said in a statement. Still, the S.E.C. is not ready to scrap the proxy rule altogether. "I firmly believe that providing a meaningful opportunity for shareholders to exercise their right to nominate directors at their companies is in the best interest of investors and our markets," Ms. Schapiro said. "I remain committed to finding a way to make it easier for shareholders to nominate candidates to corporate boards." A couple of modest observations. First, proxy access is Schapiro's baby, so it must have hurt to let it go (I would have thought hard about taking it further, but it could be that DOJ wouldn't let her do it; they think a lot about winnability, and as for that I would have thought that odds of that would be better in the D C Circuit than in the Supreme Court, but when your best shot is an en banc reversal, and you're not in the 9th Circuit, well, your best shot isn't great), but maybe she's serious about redoing the rule. Second, if she is serious about redoing the rule, she's not going to learn a lot from careful study of the court's opinion, which tried, with no textual basis in the statute, to import a cost-benefit analysis requirement into SEC rulemakings (the SEC arguably met this nonexistent requirement, too, at least if considering the economic impact of a rule is a CBA, but I suppose it could try to do a doubleplusgood CBA next time), and faulted the SEC for not addressing random bits of the record in a totally unpredictable way. If there is something to be learned by the proxy access rule decision, it's probably this; if you're going to get a serious corporate governance regulation past a deregulatory court, you should make it simple, simple, simple, with fewer weird triggers, and you shouldn't apply it to mutual funds.
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