Securities and Exchange Commission

SEC Announces a New Director of the Division of Corporation Finance; House Wants to Know Where the JOBS Act Rules Are

by Vanessa Schoenthaler on May 16, 2013

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The New Director of Division of Corporation Finance

Yesterday the Securities and Exchange Commission announced the naming of Keith F. Higgins as director of the Commission’s Division of Corporation Finance.

Higgins was a partner in the Boston office of Ropes & Gray LLP, where he advised public companies regarding securities offerings, mergers and acquisitions, compliance and corporate governance, and underwriters regarding initial and other public offerings.

Higgins will replace Lona Nallengara, who has served as acting director since Meredith Cross’ departure in December 2012. Nallengara will assume the role of the Commission’s chief of staff.

Pressure Continues to Implement the JOBS Act 

Also yesterday, the House Financial Services Committee announced that the House of Representatives passed of a bill by a vote of 416 to 6 that directs the Commission to finalize rules implementing the provisions of the JOBS Act related to “Regulation A+” by October 31, 2013.

Of course, the bill would still have to make its way through the Senate and be signed into law before the deadline were to take effect (for what it’s worth, govtrack.us currently gives the bill a 15% chance of being enacted).

The Washington Post has a nice short piece summing up some of the current regulatory tensions facing Mary Jo White, who is scheduled to testify before the Financial Services Committee for a second time this morning on the subject of the Commission’s 2014 budget request (the Commission is seeking a 27% budgetary increase for fiscal year 2014, which would be funded entirely out of fees collected by the Commission on securities transactions).

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Mary Jo White’s Senate Confirmation Hearing Set for Today

by Vanessa Schoenthaler on March 12, 2013

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At 10:00 AM the Senate Banking Committee will hold a hearing (which you can watch here) to consider the nominations of Richard Cordray as Director of the Consumer Financial Protection Bureau and Mary Jo White as Chairman of the Securities and Exchange Commission.

It’s generally excepted that Mary Jo While will be confirmed later this month. Below is a roundup of some of the more recent coverage regarding her nomination and prepared testimony for today’s hearing:

SEC nominee White to tackle questions on her work for NFL, banks (Reuters)

SEC nominee White promises “unrelenting” enforcement (Reuters)

SEC nominee Mary Jo White to take hard line on Wall Street (WaPo)

Nominee for S.E.C. Chief Pledges to Keep Focus on Enforcement (Dealbook)

SEC nominee Mary Jo White unlikely to face much resistance from Senate (WaPo)

US SEC nominee White pledges to complete rulemaking if confirmed (Reuters)

Mary Jo White to Focus on Fiduciary Issue at SEC (AdvisorOne)

Meanwhile, as reported by Reuters, Dealbook and InvestmentNews yesterday, former SEC Chairman Mary Shapiro has been nominated to the serve on the board of directors of General Electric Co. The shareholder vote on director nominees, among other things, will take place at GE’s annual meeting to be held on April 24, 2013.

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One to Watch: Netflix Discloses that its CEO’s Facebook Posting May Trigger a Reg. FD Violation

by Vanessa Schoenthaler on December 7, 2012

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Yesterday Netflix filed a Form 8-K disclosing that it and its CEO, Reed Hastings, have each received a “Wells notice” indicating that the Staff of Securities and Exchange Commission intends to recommend that the Commission institute a cease and desist proceeding or bring a civil injunctive action or both against Netflix and Hastings for violations of Regulation FD related to a posting on Hastings’ Facebook page back in July.

Here’s the posting at issue:

Here’s Hastings’ response, also posted on his Facebook page a few moments after it was filed as an exhibit to Netflix’s Form 8-K:

Regulation FD requires that whenever a company or, as in this case, someone acting on a company’s behalf, discloses material nonpublic information to certain market participants it must also disclose that information publicly—simultaneously, in the case of an intentional disclosure, and promptly, in the case of an unintentional disclosure.  The public disclosure requirement can be satisfied by filing a Form 8-K or by any other method reasonably designed to provide broad, non-exclusionary distribution of the information to the public.

Hastings’ strongest argument is that the information was not material and therefore Regulation FD should not come into play at all. However, the more interesting argument is that information posted on his Facebook page “is very public”, which implies that even if the information in question was material, posting it on Facebook would constitute a public disclosure in compliance with the requirements of Regulation FD.

The difficulty with such a conclusion is that, as Hastings notes, Netflix “doesn’t currently use Facebook and other social media to get material information to investors … .”

For purposes of Regulation FD, information posted on a company’s website is public once it has been disseminated in a manner calculated to reach investors in general through recognized channels of distribution and investors have been afforded a reasonable waiting period to react to that information.

It would be challenging to cast Hastings’ Facebook page as a recognized channel of distribution for one instance of disclosure, particularly since investors haven’t been alerted to the fact that Netflix intended to use the page as such.

This is definitely a matter to follow, as there hasn’t been much, if anything, in the way of new guidance from the Commission on the use of company websites and social media since its 2008 release. I imagine the matter will settle around the issue of whether the information disclosed was material, but it’ll still be informative to see what arguments are raised and what position the Commission ultimately takes.

It’s also a good reminder to occasionally dust off and review your social media policy with everyone in the company.

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The SEC Issues New Exchange Act C&DIs: Business Activities Related to Iran

by Vanessa Schoenthaler on December 6, 2012

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The Iran Threat Reduction and Syria Human Rights Act of 2012 (the “Act”), which was enacted on August 10, 2012, amended the Securities Exchange Act of 1934 to add new Section 13(r), requiring reporting companies to disclose certain business activities related to Iran in periodic reports filed with the Securities and Exchange Commission after February 6, 2013.

Yesterday the Division of Corporation Finance issued seven new Compliance and Disclosure Interpretations related to Section 13(r). In summary:

  • If an issuer’s annual report is required to be filed after the Act’s February 6, 2013 effective date, the report must include disclosure of Iran-related business activities pursuant to Section 13(r) even if the issuer files the report early (on or before the February 6, 2013 effective date).
  • If an issuer’s annual report is required to be filed after the Act’s February 6, 2013 effective date, the report must include disclosure of Iran-related business activities pursuant to Section 13(r) that occurred during the entire fiscal year covered by the report, including the period prior to enactment of the Act. For example in the case of an issuer that files an annual report for the fiscal year ending December 31, 2012, that issuer is required to disclose any Iran-related business activities specified in Section 13(r) for the period from January 1, 2012 through December 31, 2012.
  • The term “affiliate” as used in the Act has the meaning set forth in Exchange Act Rule 12b-2.
  • Disclosure is only required in a periodic report if an issuer or any of its affiliates engaged in any Iran-related business activities specified in Section 13(r) for the period covered by the report; it is not necessary to include a statement to the effect that the issuer and its affiliates have not engaged in any Iran-related business activities specified in Section 13(r).
  • A transaction or dealing with any person or entity identified under 31 CFR § 560.304 must be disclosed unless it was specifically authorized by a U.S. federal department or agency. If a disclosable transaction was specifically authorized by a foreign governmental authority, an issuer may disclose that fact in addition to the other information specified in Section 13(r) to provide appropriate context.
  • Both general and specific licenses constitute specific authorization by the Office of Foreign Assets Control (OFAC) of the U.S. Department of the Treasury to engage in a transaction, provided all conditions of the applicable license are strictly observed.
  • Any disclosures included in a periodic report in response to Section 13(r) will automatically become publicly available upon filing through the EDGAR system.

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Various and Sundry: Commissioner Schapiro’s Resignation

by Vanessa Schoenthaler on December 3, 2012

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Following up on last week’s announcement by the Securities and Exchange Commission that Commissioner Mary Schapiro will be resigning on December 14th, here’s a round-up of some of the more recent coverage:

On her legacy …

Harvey Pitt: Shaping Up a Divided SEC (WSJ)

When Ms. Schapiro took charge in January 2009, the SEC was in disarray …

That deplorable state of affairs changed with Ms. Schapiro’s ascendancy. She replaced senior SEC staff, instilled agency employees with ­renewed enthusiasm and respect for the agency’s mission, reorganized and streamlined decades-old bureaucratic and administrative structures, and fostered a new (and deeper) sense of professionalism at every level.

…

But, as Ms. Schapiro departs the agency she ably led, happy days most assuredly are not here again. The many problems the SEC must deal with are fraught with complexity and irrationality. Danger lurks around ­every corner …

The SEC, from lapdog to watchdog (WaPo Opinion)

There’s a total sea change at the agency … They are aggressive. There’s no more free passes on Wall Street. They eagerly seek out big cases. … They used to be industry’s lapdog and now they’re actually an investor’s watchdog.

A mixed record - Mary Schapiro leaves the SEC (The Economist)

The unsurprising resignation of Mary Schapiro, head of the Securities and Exchange Commission (SEC), announced on November 26th, was followed by an unsurprising flurry of statements dripping with faint praise. True, the financial markets did not collapse during her tenure, and she was more engaged than her disastrous predecessor, Christopher Cox. But those are very low bars.

… ongoing rulemaking initiatives …

New SEC head faces fights on several fronts, legal straitjacket (Reuters)

The agency also has a long way to go to complete the 95 rule makings required under Dodd-Frank.

Emails suggest SEC’s Schapiro delayed JOBS Act rule amid concerns about legacy (Reuters)

Outgoing U.S. Securities and Exchange Commission Chairman Mary Schapiro delayed immediately implementing a rule to lift a ban on broader-based advertising for private placements in part because she feared it would tarnish her legacy as a pro-investor leader of the agency, internal SEC emails obtained by a U.S. House of Representatives oversight panel show

SEC head dragged her feet on new rule at urging of lobbyist, GOP congressman says (WaPo)

Republican Rep. Patrick T. McHenry accused the outgoing chairman of the Securities and Exchange Commission of dragging her feet on a regulation to “appease” special-interest groups that opposed it and to “protect” her legacy.

Senators to SEC: It’s time to open private placements to public (Investment News)

In a letter to Chairman Schapiro Republican senators call on the Commission to lift the ban on general solicitation and general advertising by the year’s end.

… and the search for a successor …

As Miller Drops Out, Race for S.E.C. Chief Shifts (DealBook)

Mary Miller, a senior Treasury Department official, removed her name from consideration in recent days, according to several people briefed on the matter who were not authorized to discuss the process. While some Washington insiders considered Ms. Miller a top choice, several people close to her said she was “not interested” in the job.

With Ms. Miller withdrawing, Sallie L. Krawcheck, a long-time Wall Street executive, has emerged as a potential front-runner.

Sallie Krawcheck should not run the SEC (MuniLand)

Running the SEC, a complex, challenging job, requires the highest ethics to coordinate these many roles in financial regulation.

Krawcheck, while chief financial officer of the giant bank Citi, was at the heart of the largest scandal of the financial crisis. Her performance suggests that she does not have the skills or the temperament to run our nation’s primary financial regulator.

Insight: Krawcheck, possible SEC head, raises Washington image (Reuters)

To some, talk of Krawcheck as a candidate came as a surprise given her background as a former executive at banks that needed to be rescued by the government and her lack of Washington experience.

Unrelated:

Yay or Nay: An SEC and CFTC Merger?

On Thursday outgoing Congressman Barney Frank and Congressman Mike Capuano introduced Markets and Trading Reorganization Act into the house, legislation which would merge the Securities and Exchange Commission and the Commodity Futures Trading Commission.

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SEC Chairman Mary Schapiro to Step Down in December

by Vanessa Schoenthaler on November 26, 2012

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Following several months of speculation, Dealbook first reported this morning that Mary Schapiro will step down as Chairman of the Securities and Exchange Commission. Chairman Schapiro, who will depart on December 14, 2012, was first appointed as chairman in January 2009 and, as noted in the Commission’s press release, her tenure has outlasted 24 of the previous 28 chairmen.

Shortly after the Commission’s announcement the White House announced that President Obama will designate Commissioner Elisse Walter as chairman once Mary Schapiro departures. Commissioner Walter’s was first appointed to the Commission in 2008 and previously served as acting Chairman in January 2009; her term with the Commission is set to expire in 2013.

Dealbook and others are also reporting that the White House eventually expects to nominate another chairman. Potential successors being mentioned include: Commissioner Walter, Mary John Miller, the Treasury Department’s Under Secretary for Domestic Finance, Richard Ketchum, Chairman and Chief Executive Officer of FINRA, Sallie Krawcheck, a former Bank of America and Citigroup executive, and Robert Khuzami, the Commission’s Director of Enforcement.

Additional coverage can be found at: WSJ Law Blog and again here, Reuters and again here, FT Alphaville, Washington Post, Investment News and AdvisorOne.

I imagine Chairman Schapiro’s departure, and the uncertainty surrounding who the next permanent chairman will be, is likely to further delay implementation of both pending and upcoming Dodd-Frank Act and JOBS Act rulemaking initiatives.

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The SEC Announces Relief Measures for Those Affected by Hurricane Sandy

by Vanessa Schoenthaler on November 15, 2012

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Yesterday the Securities and Exchange Commission announced the issuance of an order exempting publicly traded companies and others affected by Hurricane Sandy and its aftermath from certain Exchange Act rules and requirements.

Exchange Act Reports, Schedules and Forms

In particular, the order conditionally exempts issuers subject to Sections 13(a) or 15(d) of the Exchange Act from the requirement to file certain Exchange Act reports, schedules or forms during the period from and including October 29, 2012 through November 20, 2012, provided that the issuer:

  • is unable to meet a filing deadline due to Hurricane Sandy and its aftermath;
  • files the required report, schedule or form by November 21, 2012; and
  • discloses in the report, schedule or form that it is relying on the Commission’s order and states the reasons why, in good faith, it could not file the report, schedule or form on a timely basis.

Proxy Solicitation Materials and Information Statements

The order also conditionally exempts issuers from the requirement to furnish proxy statements, annual reports and other soliciting materials, and information statements and annual reports to a security holder, provided:

  • the security holder has a mailing address located in a zip code where the postal service has suspended mail service of the type or class of mail customarily used by the issuer;
  • the issuer has followed normal procedure when furnishing solicitation or information materials to the security holder in accordance with applicable rules; and
  • if requested by the security holder, the issuer provides the solicitation or information materials by a means reasonably designed to furnish the materials to the security holder.

Any issuer or other person unable to meet a deadline, including any shareholder who is unable to meet a deadline applicable to a shareholder proposal, or delivery obligation as a result of Hurricane Sandy or who is in need of other assistance related to public filings, can also call or email CorpFin.

Auditor Independence and Reconstruction of Accounting Records

In addition, the order conditionally exempts independent certified public accountants that are engaged to provide audit services for an issuer from Exchange Act rules and requirements that prohibit auditors from providing bookkeeping or other services related to the accounting records of an audit client, provided that any such services are:

  • limited to reconstruction of previously existing accounting records that were lost or destroyed as a result of Hurricane Sandy and cease as soon as the lost or destroyed records are reconstructed, financial systems are fully operational and the issuer can effect an orderly and efficient transition to management or other service provider; and
  • subject to pre-approval by the issuer’s audit committee.

Filing Date Adjustments

The Commission also announced that it will take the following positions regarding filing dates:

For purposes of eligibility to use Form S-3 (as well as well-known seasoned issuer status) for an issuer relying on the Commission’s order, any of that issuer’s Exchange Act reports that would have been required to be filed during the period from October 29, 2012 to November 20, 2012 will be due by November 21, 2012. Such an issuer will, therefore, be considered:

  • current in its Exchange Act reports prior to November 21, 2012 if it was current in its Exchange Act reports as of October 28, 2012;
  • current in its Exchange Act reports as of November 21, 2012 if it was current in its Exchange Act reports as of October 28, 2012 and it has made any filings required during the period from October 29, 2012 to November 20, 2012;
  • timely in its Exchange Act reports prior to November 21, 2012 if it was timely in its Exchange Act reports as of Oct. 28, 2012; and
  • timely in its Exchange Act reports as of November 21, 2012 if it was timely in its Exchange Act reports as of October 28, 2012 and it has made any filings required during the period from October 29, 2012 to November 20, 2012 on or before November 21, 2012.

For purposes of eligibility to use Form S-8 and the current public information eligibility requirements of Rule 144(c), an issuer relying on the Commission’s order will be considered:

  • current in its Exchange Act reports prior to November 21, 2012 if it was current in its Exchange Act reports as of October 28, 2012; and
  • current in its Exchange Act reports as of November 21, 2012 if it was current in its Exchange Act reports as of October 28, 2012 and it has made any filings required during the period from October 29, 2012 to November 20, 2012.

Notification of Late Filing on Form 12b-25

Issuers that receive an extension on filing Exchange Act annual reports or quarterly reports pursuant to the Commission’s order will be considered to have a due date of November 21, 2012 for those reports for purposes of Exchange Act Rule 12b-25. As such, those issuers will be permitted to rely on Rule 12b-25 where they are unable to file the required reports on or before November 21, 2012.

Investment Companies, Transfer Agents and Other Persons

The Commission’s order and announcement also detail certain conditional exemptions and filing date adjustments for transfer agents, investment companies and others, which are not addressed here.

(Download File)

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The SEC’s Resource Extraction Rules Will Not Be Put On Hold

by Vanessa Schoenthaler on November 9, 2012

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Yesterday the Securities and Exchange Commission issued an order denying a joint motion to stay the effectiveness of Exchange Act Rule 13q-1 and new Form SD (related to disclosure of payments by resource extraction issuers) pending the outcome of the American Petroleum Institute, Chamber of Commerce, Independent Petroleum Association of America and the National Foreign Trade Council’s petition for review filed with the U.S. Court of Appeals for the D.C. Circuit on October 10, 2012.

The Court of Appeals has directed expedited briefing and argument on the parties’ petition for review, and the Commission notes in its order that a determination on Rule 13q-1′s validity may be made as soon as this spring.

Resource extraction issuers are not required to begin complying with the new rules until the fiscal year ending after September 30, 2013.

(Download File)

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The Division of Corporation Finance Issues a New Staff Legal Bulletin on Rule 14a-8 Shareholder Proposals

by Vanessa Schoenthaler on October 17, 2012

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Yesterday the Division of Corporation Finance (CorpFin) issued a new Staff Legal Bulletin, No. 14G,  in its ongoing series of guidance focusing on shareholder proposals under Exchange Act Rule 14a-8.

Staff Legal Bulletin (SLB) No. 14G elaborates on three matters addressed in prior SLBs:

  • the sufficiency of proof of ownership under Rule 14a-8(b)(2)(i) for purposes of verifying whether a beneficial owner is eligible to submit a shareholder proposal;
  • the manner in which a company should notify a shareholder of a failure to provide sufficient proof of ownership under Rule 14a-8(b)(1)’s one-year continuous ownership requirement; and
  • the use of website addresses in proposals and supporting statements.

A Shareholder’s Proof of Ownership

To be eligible to submit a proposal under Rule 14a-8 a shareholder must provide proof that they have continuously held at least $2,000 in market value, or 1%, of a company’s securities entitled to vote on the proposal for at least one year by the date of proposal’s submission and confirm that they will continue to hold the securities through the date of the shareholder meeting.

There are two ways for a shareholder to hold securities: directly in their own name, as a registered owner, or indirectly, through one or more securities intermediaries, as a beneficial owner. In the latter case, the securities are either held in the name of the intermediary (in “street name”) or, where the intermediary is a Depository Trust Company (DTC) participant, are deposited with DTC and held in the name of DTC’s nominee (Cede & Co.).

One way for a beneficial owner to demonstrate eligibility under Rule 14a-8′s proof of ownership requirement is by obtaining a proof of ownership letter from the holder of record, the securities intermediary.

In SLB No. 14F CorpFin expressed the view that, with respect to securities that are deposited with DTC, only intermediaries that are DTC participants should be considered holders of record for purposes of providing proof of ownership.

In this latest SLB No. 14G, CorpFin clarifies that a proof of ownership letter from an affiliate of a DTC participant will also satisfy the requirement to provide proof of ownership from a DTC participant.

CorpFin also clarifies that a shareholder holding securities through an intermediary that is not a broker or bank can demonstrate eligibility under Rule 14a-8′s proof of ownership requirement by obtaining a proof of ownership letter from that intermediary. However, if that intermediary is not a DTC participant or an affiliate of a DTC participant, then the shareholder must also obtain a proof of ownership letter from a DTC participant or affiliate that can verify the intermediary’s holdings.

A Company’s Notice of Failure to Provide Sufficient Proof of Ownership

If a shareholder submits a proposal but fails to satisfy one of Rule 14a-8′s eligibility or procedural requirements a company may exclude the shareholder’s proposal if, after the company notifies the shareholder of the defect and explains in adequate detail what the shareholder must do to remedy it, the shareholder fails to correct the defect.

In SLB No. 14G CorpFin voices concern over notices that are not adequately describing defects or explaining what a shareholder must do to remedy defects that occur in proof of ownership letters.

For example, CorpFin notes that a commonly occurring defect is for a proof of ownership letter not to verify a shareholder’s beneficial ownership for the entire one-year period preceding and including the submission date of a shareholder proposal. Yet some notices of defect fail to point out the gap in ownership covered by the proof of ownership letter.

As such, CorpFin will no longer concur in the exclusion of a shareholder proposal on the basis of the shareholder’s proof of ownership not covering the required one-year period unless the company provides a notice of defect that identifies the specific date on which the proposal was submitted and explains that in order to cure the defect the shareholder must obtain a new proof of ownership letter verifying continuous ownership of the requisite amount of securities for the one-year period preceding and including such date.

CorpFin considers the submission date to be the date on which the shareholder proposal is postmarked or transmitted electronically, and notes that companies should include copies of the postmark or evidence of electronic transmission with their no-action requests.

A Shareholder’s Use of Website Address in Proposals and Supporting Statements

In SLB No. 14 CorpFin takes the position that referencing a website address in a shareholder proposal or supporting statement will not violate the 500-word limitation imposed by Rule 14a-8(d) because the website address only counts as one word. However, a website address could be subject to exclusion if it refers to information that may be materially false or misleading, irrelevant to the subject matter of the proposal or otherwise in contravention of the Commission’s proxy rules.

SLB No. 14G reaffirms this position and provides additional guidance on appropriate uses of website addresses in shareholder proposals and supporting statements.

In particular, CorpFin notes that if a proposal or supporting statement refers to a website that provides information necessary for shareholders and the company to understand with reasonable certainty exactly what actions or measures the proposal requires, and such information is not also contained in the proposal or in the supporting statement, then the proposal would raise concerns under Rule 14a-9 (false or misleading statements) and would be subject to exclusion under Rule 14a-8(i)(3) as vague and indefinite. However, if shareholders and the company can understand with reasonable certainty exactly what actions or measures the proposal requires without reviewing the information provided on the website, then the proposal would not be subject to exclusion under Rule 14a-8(i)(3) on the basis of the reference to the website address, as the information on the website would only be considered supplemental.

Secondly, CorpFin notes that it will not concur that a reference to a website may be excluded as irrelevant under Rule 14a-8(i)(3) on the basis of the website not yet being operational, if the shareholder, at the time the proposal is submitted, provides the company with the materials that are intended for publication on the website and a representation that the website will become operational at, or prior to, the time the company files its definitive proxy materials.

Finally, if information on a website is revised after submission of a proposal and the company believes that the revised information renders the website reference excludable, but the deadline for submitting a no-action letter request has lapsed, CorpFin may concur that the changes to the website constitute good cause for missing the no-action request deadline.

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Inadequacy of Cost-Benefit Analysis In SEC Rulemaking – A Fall Trend?

by Vanessa Schoenthaler on October 12, 2012

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On Wednesday the American Petroleum Institute (API), the largest U.S. trade association for the oil and natural gas industry, the U.S. Chamber of Commerce, the Independent Petroleum Association of America, a U.S. trade association for independent oil and natural gas producers, and the National Foreign Trade Council, the oldest and largest trade association advocating an open, rules-based international trade system, jointly filed a complaint with the D.C. District Court and petition for review with the U.S. Court of Appeals for the D.C. Circuit, seeking to vacate and enjoin the Securities and Exchange Commission from implementing and enforcing the recently adopted, and Dodd-Frank Act-mandated, rule requiring disclosure of certain payments made by resource extraction issuers to the U.S or foreign governments. The case was filed in both the District Court and the Court of Appeals pending resolution of the jurisdiction question.

Among other things, the District Court complaint alleges that the Commission failed to adequately perform a cost-benefit analysis when promulgating the final rule.

Remember it was just last year that the U.S. Court of Appeals for the D.C. Circuit vacated the Commission’s proxy access rule on the basis of the same inadequate cost-benefit analysis argument. However, shortly thereafter the Commission revamped its approach to economic analysis in rulemaking and released an internal memorandum providing guidance on the revised approach.

The disclosure rule at issue in the API et al. v. SEC suit underwent an economic analysis under the revised approach, so it’ll be interesting to see how the court which ultimately hears the case rules on the cost-benefit analysis argument.

The outcome of this case may also influence the approach of others. Compliance Week has already asked Is the Conflict Minerals Rule Next to Face a Legal Challenge?, noting that the U.S. Chamber of Commerce has not ruled out that possibility.

In an unrelated article, Reuters notes that investor groups are also making the cost-benefit analysis argument in the context of the Dodd-Frank Act-mandated proposed rule to lift the ban on general solicitation and general advertising, but that those groups feel it’s still too early to talk about filing a lawsuit.

In any event, the outcome of the API et al. v. SEC suit is one to watch, as it may determine whether the cost-benefit analysis argument becomes a trend.

Update October 24, 2012:

The National Association of Manufacturers, the largest industrial trade association in the U.S., Business Roundtable and U.S. Chamber of Commerce have filed a joint petition with the U.S. Court of Appeals for the D.C. Circuit seeking to have the conflict mineral rules modified or set aside in whole or in part, but without specifying a basis for challenging the rule.

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