January 21, 2011

Shareholder Proposals: KBR Sues Chevedden Over Eligibility

Following in Apache’s footsteps, KBR filed this complaint last week in an effort to have the Federal District Court for the Southern District of Texas issue a declaratory judgment allowing the company to exclude a shareholder proposal submitted by John Chevedden due to his alleged lack of eligibility. Reflected in this blog, you’ll recall that Apache received this type of relief last proxy season in the exact same court (based on similar introductory broker letter facts, with the case brought by the same lawyer).

Like Apache, KBR filed a lawsuit rather than attempt to exclude the proposal through the normal SEC channels (and thus once more is challenging the Hain Celestial position of the Staff regarding the use of introductory letters from brokers as evidence of ownership under Rule 14a-8(b)). Here is KBR’s notice to the SEC of its intention to file the lawsuit.

Jim McRitchie blogs that Apache has decided to exclude a proposal from John Chevedden again this year too (this time around, the company has filed a notice with Corp Fin – thus not going the no-action route like last year – but isn’t bothering with another lawsuit this year). Jim also notes this Houston Chronicle article on the KBR lawsuit.

Proxy Access Litigation: The SEC Files Initial Brief

On Wednesday, the SEC filed its 83-page initial brief in the challenge to its proxy access rules filed by the Business Roundtable and the Chamber of Commerce in the U.S. Court of Appeals for the District of Columbia Circuit. I understand the court plans to hold its oral argument hearing on April 7th. We have posted the brief – along with the other briefs filed to date – in our “Proxy Access” Practice Area.

Dodd-Frank: SEC Submits Congressional Study on Burden of Investment Advisor Exams

On Thursday, the SEC Staff submitted its Congressional study on enhancing investment adviser examinations, required under Section 914 of Dodd-Frank. As noted in this article, “the premise of the report is that the number of investment advisors outweighs the SEC’s resources to conduct appropriate oversight (inspection and enforcement) activities.”

In an unusual move, SEC Commissioner Elisse Walter felt compelled to issue this 8-page statement to discuss the growing burdens on the Staff, while resources continue to be dangerously low (and that Congress hasn’t even approved the budget increase that Dodd-Frank sought). Kudos to Commissioner Walter for highlighting a troubled situation…

– Broc Romanek