On June 21, 2023, we published a lingua negoti blog post reviewing the SEC’s adoption of final rules designed to strengthen disclosures about a company’s repurchases of its own shares. On October 31, 2023, the U.S. Court of Appeals for the Fifth Circuit issued an opinion in Chamber of Commerce of the USA v. SEC, in which petitioners challenged the Share Repurchase Disclosure Modernization Rule (“Repurchase Rule”), which became effective on July 31, 2023.

The Fifth Circuit granted the petition for review and remanded to the Commission “to correct the defects” the court identified in the manner in which the Repurchase Rule was adopted, largely related to issues about quantifying costs and benefits. The court gave the SEC until November 30, 2023 to correct those defects in its process, noting “there is at least a serious possibility that the agency will be able to substantiate its decision given an opportunity to do so.”

Section 705 of the Administrative Procedure Act provides that an agency may “postpone the effective date of action taken by it” pending judicial review when it finds that “justice so requires.” As a result of the court’s decision, on November 22, 2023 the SEC issued an order finding that it is consistent with what justice requires to stay the effectiveness of the Repurchase Rule pending further SEC action.