Business Groups Urge SEC to Restore Predictability to No-Action Relief Process

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By Yin Wilczek

Feb. 24 — A coalition of 17 business groups Feb. 24 asked the Securities and Exchange Commission to take “corrective action” to “restore predictability and certainty” to its no-action relief process “without delay.”

The groups—in a scathing letter to SEC Chairman Mary Jo White—said investors and companies alike have been adversely impacted by the agency's recent suspension of no-action relief under a provision that allows companies to omit from their proxy materials shareholder proposals that directly conflict with a management resolution.

Corrective action by the commission “would be in keeping with the SEC's general reputation and record of acting in a deliberate, balanced, and transparent manner on behalf of all stakeholders,” they said.

APA Violation?

The groups also suggested that the SEC may have violated the Administrative Procedure Act by abruptly shifting course, in the middle of the proxy season, on a policy widely relied upon by the public. That shift “has the effect of changing the applicable law and imposing new obligations in midstream,” they charged.

SEC spokesman John Nester declined to comment on the letter.

The groups include the U.S. Chamber of Commerce, the Securities Industry and Financial Markets Association, the American Bankers Association, the National Association of Manufacturers and the Financial Services Roundtable.

The SEC suspended its no-action process under 1934 Securities Exchange Act Rule 14a-8(i)(9) in January following investor protests that numerous companies were using the provision to avoid putting shareholder-submitted proxy access proposals to a vote.

Business representatives have said the suspension of relief and its timing has been extremely disruptive and left companies with untenable choices regarding conflicting resolutions on matters beyond proxy access.

The Chamber also recently asked the SEC to undertake a comprehensive review of its shareholder proposal rule.

To contact the reporter on this story: Yin Wilczek in Washington at ywilczek@bna.com

To contact the editor responsible for this story: Kristyn Hyland at khyland@bna.com

The letter is available at http://www.centerforcapitalmarkets.com/wp-content/uploads/2015/02/2015-2-23-Coalition-letter-to-SEC-re-whole-foods-decision.pdf.