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  1. The D.C. Circuit Court of Appeals held, here, that the SEC’s proxy access rules are invalid because the SEC failed to adequately consider the rules’ effect on efficiency, competition, and capital formation as required by the Administrative Procedures Act. This is the latest setback in the SEC’s long, bumpy road to proxy access reform, which in modern memory (meaning “since I started paying attention”) began back in 2003 (see here) and at one point included dueling rule proposals (see here and here). It could be back to the drawing board, yet again, for the SEC to ramp up its economic analysis, although since the SEC is behind on Dodd-Frank implementation and has further delayed some rulemaking, see here, and may have its 2012 budget hopes dashed by Congress, see here, one wonders whether it will take another decade to get rules in place. In its expression of disappointment about the D.C. Circuit’s ruling, here, the SEC noted that the rule allowing shareholders to submit proposals for proxy access, which was stayed by the SEC pending resolution of the challenge to its rules, was not affected by the court’s decision. Can you say “private ordering”?
  2. As we warned last month, Dodd-Frank’s July 21 birthday occasioned more retrospectives than you can shake a stick at. For a useful summary of implementation in year one, see here, and, for a more positive spin, see here. The editor at ICYMI received The Daily Show retrospective, here, from about 1,000 people. (Warning: Although aired on regular cable and readily accessible on the Internet, we consider The Daily Show segment inappropriate for small children, some securities lawyers, and anyone who will write to us complaining that we included a link to it.)
  3. ISS published its preliminary 2011 proxy season report, here. Included in its “key takeaways”:
  • company compensation practices garnered 91.2% approval on average;
  • shareholders at 1.6% of companies said nay on pay;
  • annual say on pay is clearly favored by investors;
  • board declassification proposals got more support;
  • support for environmental and social shareholder proposals rose (to 20.6% on average); and
  • opposition to director nominees decreased, which was attributed to more engagement due to “say on pay” implementation.
  1. The SEC adopted, here, Dodd-Frank mandated rules to decrease reliance on credit agency ratings, replacing rating criteria for registering non-convertible debt securities on short forms S-3 and F-3 with a new four-part test. Some might consider Congress’s implied views of ratings agencies in Dodd-Frank presciently self-serving, given the astounding recent downgrade of U.S. Treasury debt by S&P, see here. The SEC also re-proposed a rule regarding shelf eligibility conditions for asset-backed issuers, here.
  2. The FDIC adopted final rules, here, for the clawback of compensation from former and current executives and directors “substantially responsible” for the failed condition of covered institutions. And, speaking of clawbacks, note the SEC Commissioners’ rejection of its enforcement staff’s proposed settlement of its first ever effort to claw back compensation under Section 304 of the Sarbanes-Oxley Act from an executive not accused of complicity in accounting fraud. See here.
  3. Expect whistleblower bounty rules from the Commodity Futures Trading Commission this week, see here. The CFTC rules, which haven’t gotten nearly the play of the SEC’s whistleblower bounty rules, could be a double whammy for firms subject to regulation by both agencies. On the topic of the SEC’s whistleblower rules, an admonition to take a breath, calm down, and do the best you can with your whistleblower system is here.