US Chamber of Commerce Sues SEC to Block Share Buyback Rule

The US Chamber of Commerce and other business groups have sued to block the SEC’s recent rule that requires publicly traded companies to disclose more information about stock buybacks.

The Securities and Exchange Commission’s rule risks airing important managerial decisions and violates the First Amendment, the Chamber said. The business groups are also challenging the rule under the Administrative Procedure Act.

Joining the Chamber in the suit is the Texas Association of Business and the Longview Chamber of Commerce.

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The stock buyback rule doesn’t protect investors, US Chamber Executive Vice President and Chief Policy Officer Neil Bradley said in a statement Friday.

“Instead, it puts the thumb on the scale to discourage buybacks despite the fact that the repurchasing of shares improves returns for savers and investors across the economy,” Bradley said.

Adopted May 3 in a 3-2 vote, the SEC’s rule requires companies to disclose, at the end of each quarter, the daily buyback activity for that period. Companies will also have to disclose, among other things, details about the rationales for buybacks.

The rule is intended to “improve investors’ visibility into buyback programs and their transaction history,” SEC Chair Gary Gensler said last week. An agency spokesperson said Friday the SEC would “vigorously defend the challenged rule in court.”

The Chamber’s case was filed in the US Court of Appeals for the Fifth Circuit.