Is SEC’s Cost-Benefit Analysis Lacking?
For the third time in 6 years, the U.S. Court of Appeals (DC) has vacated an SEC rule because the agency failed to conduct an adequate cost-benefit analysis. After stymying the SEC’s efforts to reform mutual fund governance (2005 & 2006) and regulate equity-indexed annuities (2008), it has now vacated the SEC’s “proxy access rule,” which required that public companies, under certain circumstances, include on the company’s proxy persons nominated for the board by shareholders owning at least 3% of the company’s voting securities.
What are the standards being applied by the court? Can they be addressed by the SEC? Do requirements that agencies consider efficiency concerns in their rulemaking effectively rule out action based on unquantifiable factors, such as “enhanced confidence in the markets?”