WASHINGTON (Reuters) – The U.S. Securities and Exchange Commission’s bid to force companies to disclose more details about their share buyback plans was cut down by a federal appeals court on Tuesday after the agency failed to meet the court’s deadline to fix what the judges had called “defects” in the requirement.
The ruling is a win for the U.S. Chamber of Commerce, the top business lobbying group that had sued to block the rule adopted earlier this year by the SEC on a 3-2 vote. The rule would have required quantitative disclosure of daily repurchases – which amounted to nearly $950 billion in 2022 – on a quarterly or semi-annual basis.
Judges for the U.S. Fifth Circuit Court of Appeals in October had given the SEC 30 days to “correct defects in the rule,” saying it had violated the Administrative Procedure Act by not responding to the Chamber’s comments during the rule-making process and “failed to conduct a proper cost-benefit analysis.”
The agency did not meet that deadline after a request for an extension was rejected by the court last month.
“The SEC claims to have ‘worked diligently to ascertain the steps necessary to comply with the Court’s remand order.’ Yet the agency has nothing to show for its efforts,” Circuit Judge Jerry Smith, a Ronald Reagan appointee, wrote.
“It returns to this court empty-handed … The rule remains no less flawed – and no less unlawful – than it was on October 31, 2023.”
An SEC spokesperson said that while Commission was “disappointed in the Court’s ruling, it’s important to note that the court rejected petitioners’ First Amendment challenge to the rule and petitioners’ challenge to the rule’s comment period”.
“In terms of next steps related to share repurchase disclosures, any staff recommendation will be presented to the commission,” the spokesperson said.
(Reporting by Dan Burns; Editing by Stephen Coates)