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17 C.F.R. § 240.14a-8 (1970) contains persuasive indicia that the Securities and Exchange Commission's proxy procedures are possessed of sufficient "adversariness" and "formality" to render its final proxy determinations amenable to judicial review.
Concerned over the corporation's manufacture and sale of napalm, the shareholder presented the corporation with a proposal, for inclusion in corporation's proxy materials, requesting that the shareholders adopt a resolution barring the corporation's manufacture and sale of napalm. The corporation refused to include the proposal, contending that it was motivated by moral or political concerns, and that it related to ordinary business operations. In a no-action letter, the Securities and Exchange Commission (SEC) adopted the corporation's stance and affirmed the corporation's refusal to include the proposal. The shareholder initiated a suit appealing the SEC's decision. The SEC moved to dismiss the action, contending that the court was without jurisdiction, under 15 U.S.C.S. § 78y(a), to entertain the appeal.
Was the SEC’s determination subject to judicial review?
The court denied the motion to dismiss and remanded the cause for further proceedings. The court ruled that the shareholder was an identifiable, aggrieved party for purposes of § 78y(a), and the SEC's decision was final in effect. As such, the decision was subject to judicial review.