On Friday, May 12, 2023, the U.S. Chamber of Commerce announced that it had filed a lawsuit against the SEC to prevent implementation of the SEC’s new Share Repurchase Disclosure Modernization rules, which KMK has recently discussed. The Chamber filed in the U.S. Court of Appeals for the Fifth Circuit, a conservative leaning court that has issued several high profile rulings adverse to the Biden administration. 

The litigation challenges the SEC’s rule under the Administrative Procedure Act, as well as the U.S. Constitution. The Chamber is taking the position that the SEC’s mandatory disclosure requirements not only risk the publicity of important managerial decisions but also compel speech in violation of the First Amendment. The Chamber further worries that the rules discourage buybacks and harm investors that benefit from them. 

As reported by Reuters, an SEC spokesperson said the SEC “undertakes rulemaking in line with its authorities, adding: ‘We will vigorously defend the challenged rule in court.’” SEC Chair Gary Gensler told reporters he is confident that the approved rule “is grounded in the authorities that we [SEC] have used over the decades.”

The initial filing is in the form of a petition simply asking the court to review the order of the SEC approving the final rule. KMK will continue to monitor the litigation and any guidance issued by the SEC with respect to the rule’s implementation.