* SEC has no plans to seek re-hearing on proxy access
* SEC will also not seek Supreme Court review
* Appeals court had shot down proxy access in July
* Schapiro says still committed to proxy access
* SEC will continue to review how to proceed
(Adds SEC comment, background, byline)
By Sarah N. Lynch
WASHINGTON, Sept 6 The U.S. Securities and
Exchange Commission will not challenge an appeals court
decision striking down the agency's rule to make it easier for
shareholders to nominate directors to corporate boards.
The announcement, made late on Tuesday by SEC Chairman Mary
Schapiro, marks a major blow to investor advocacy groups who
had championed the so-called "proxy access" rule.
It comes more than a month after the U.S. Court of Appeals
for the District of Columbia Circuit rejected the rule, saying
the SEC had failed to properly weigh the economic consequences
of the rule. The defeat marked the first successful legal
challenge to a provision in last year's Dodd-Frank financial
In a statement, Schapiro said the SEC has no plans to seek a
rehearing before the appeals court or a Supreme Court review.
But she said she remains "committed to finding a way to make it
easier for shareholders to nominate candidates to corporate
The SEC rule would have required companies to include a
shareholder candidate on corporate ballots known as "proxies"
provided that the nominating shareholders held at least 3
percent of the voting power in the corporate stock for three
Schapiro had pushed for a rule on proxy access, saying it
would give long-term shareholders greater voice by making it
easier for them to nominate directors to the boards of the
companies they own.
The U.S. Chamber of Commerce and the Business Roundtable,
which filed the lawsuit challenging the rule, feared it would
give minority shareholders too much power and could have cost
companies millions of dollars in contested board elections.
On July 22, the three-judge panel sided with the business
groups. Judge Douglas Ginsburg, who wrote the opinion for the
court, said the SEC "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," and "contradicted itself," among other things.
With the SEC now having ruled out any legal options for
challenging the court's decision, its only recourse is to redo
the rule from scratch.
Schapiro said on Tuesday that while she still supports the
rule, she also wants to "carefully consider and learn from" the
court's rejection of it.
"I have asked the staff to continue reviewing the decision
as well as the comments that we previously received from
interested parties," she said.
(Reporting by Sarah N. Lynch; Editing by Gary Hill and Bob