On December 19, 2023, the Fifth Circuit Court of Appeals vacated the SEC’s share repurchase disclosure rule, which required issuers to: (i) report daily aggregate share repurchase data on a quarterly basis, (ii) indicate if certain directors or officers traded in the relevant securities within four business days of the public announcement of an issuer’s repurchase plan, (iii) provide narrative disclosure regarding the issuer’s objectives or rationales for its share repurchases and any policies and procedures relating to purchases and sales of the issuer’s securities; and (iv) provide quarterly disclosure regarding trading plans intended to satisfy the affirmative defense conditions of Rule 10b5-1(c). The Court’s decision means that public companies (including foreign private issuers) do not need to comply with the SEC’s share buyback disclosure rule.
Previously, the Fifth Circuit issued an opinion on October 31, 2023 finding that the SEC violated the Administrative Procedure Act “when it failed to respond to petitioners’ comments and failed to conduct a proper cost-benefit analysis.” The court remanded the rule to the SEC with a direction to correct the defects in the rule within 30 days. The SEC was unable to correct the defects in the rule within 30 days and requested an indefinite extension of time to do so, which the Court denied. It is currently unclear whether the SEC will appeal the Fifth Circuit’s order.
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