Business Roundtable v. Securities and Exchange Commission
United States Court of Appeals for the District of Columbia Circuit
647 F.3d 1144 (D.C. Cir. 2011)
The SEC (defendant) adopted Rule 14a-11, allowing shareholders to nominate director candidates through the company's own proxy materials, reasoning it would reduce costs and collective-action problems and could improve board performance and shareholder value, while acknowledging the rule would impose disclosure-related costs and could distract management. The Business Roundtable (plaintiff) submitted extensive comments and studies suggesting the rule could produce negative consequences the SEC's cost-benefit analysis had not adequately addressed, and petitioned for review of the rule after the SEC adopted it anyway, discounting the contrary studies.
Whether a rule promulgated by the SEC is valid if the SEC has not considered the rule's effect upon the efficiency, competition, and capital formation of companies.