The U.S. Chamber of Commerce and the Business Roundtable filed a lawsuit today that challenges the final proxy access rule adopted by the Securities and Exchange Commission in August. 

“The SEC’s proxy access rule empowers unions and other special interests at the expense of the vast majority of retail shareholders,” David Hirschmann, president and CEO of the U.S. Chamber’s Center for Capital Markets Competitiveness, said in a press release. “This special interest-driven rule will give small groups of special interest activist investors significant leverage over a business’ activities.”

The access measure, Rule 14a-11, authorizes shareholder groups that have held more than a 3 percent stake for at least three years to nominate board candidates to appear on management proxy statements. Smaller reporting companies are exempt from the rule for three years.  

In a lawsuit filed in the U.S. Court of Appeals for the District of Columbia Circuit, the business groups argue that the SEC rule is arbitrary and capricious; does not promote efficiency, competition, and capital formation; and would violate issuers’ rights under the First and Fifth Amendments of the U.S. Constitution.  The groups have asked the SEC to delay implementation of the access rule until the litigation is resolved. If the SEC refuses to do that, the business advocates will ask the court to prevent the rule from taking effect.

The Council of Institutional Investors, which represents public, labor, and corporate pension funds, denounced the lawsuit “as an assault on a fundamental shareowner right,” and said it plans to file a court brief in support of the access rule. 

 “Proxy access will make companies more responsive to their shareowners and more vigilant in their oversight of companies. This basic right is widely accepted in many other countries and the Council will fight to preserve it here,” Ann Yerger, the group’s executive director, said in a press release.

The business groups are represented by Eugene Scalia, Amy Goodman, and Daniel Davis of the law firm of Gibson, Dunn & Crutcher, which often advises companies on no-action requests and other shareholder matters. Scalia is the son of Antonin Scalia, who sits on the U.S. Supreme Court.