On September 29, 2010, the Business Roundtable and the U.S. Chamber of Commerce challenged the legality of the proxy access rules recently adopted by the Securities and Exchange Commission (SEC). The petition argues that those rules are arbitrary, capricious, and otherwise not in accordance with law; do not promote efficiency, competition, and capital formation; exceed the SEC’s authority; and are unconstitutional.

In connection with the petition, on October 4, 2010, the SEC stayed the effectiveness of its proxy access rules pending resolution of the legal challenge. The SEC reportedly intends to defend the legality of its rules, but its stay avoids potentially unnecessary costs, uncertainty, and disruption that could occur while the legal challenge is pending. Though the parties have asked the court to expedite review of this matter, an SEC spokesperson is reported to have indicated that it could take until late spring to resolve the legal challenge, effectively postponing the effect of proxy access for many companies until after next year’s proxy season.

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