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The SEC's Rule 14a-8 Process Just Became Even More Pointlessly Outré

Yesterday, Broc Romanek posted on SEC Chair Mary Jo White's Friday surprise with respect the no-action letter request submitted by Whole Foods Market, Inc.  Readers may recall that in December Whole Foods had obtained the staff's concurrence in excluding a shareholder access proposal submitted by Jim McRitchie. The basis for Whole Foods' exclusion was that it intended to present its own proposal.  Mr. McRitchie then "appealed" the staff's determination to the full Commission.  See This “Appeal” Of Whole Foods’ No-Action Letter Isn’t Very Appealing.  Then came Chair White's direction to the staff "to review the rule 14a-8(i)(9) basis for exclusion."  The staff then responded with this letter stating that "we express no view concerning whether Whole Foods may exclude the proposal under rule 14a-8(i)(9)."  Matters could hardly be more absurd.  To sum up:

  • SEC rules required the Whole Foods to submit its reasons for exclusion of Mr. McRitchie's proposal even though regardless of the staff's decision:
    • Whole Foods could exclude Mr. McRitchie's proposal;
    • Mr. McRitchie could challenge in court a decision by Whole Foods to exclude his proposal (see Trinity Wall St. v. Wal-Mart Stores, Inc., 2014 U.S. Dist. LEXIS 165431 (D. Del. Nov. 26, 2014)).
  • As is common, Mr. McRitchie submitted his views to the staff even though:
    • the SEC requires no response from the proponent; and
    • the no-action process is not an adversary proceeding.
  • The staff concurred with Whole Foods ("there appears to be some basis for your view").
  • Mr. McRitchie appealed to the full Commission even though:
    • the Commission has not adopted any procedures for appealing staff no-action letters under Rule 14a-8;
    • the federal courts would lack jurisdiction to review any Commission decision not to accept the appeal (see Kixmiller v. SEC, 492 F.2d 641 (1974));
    • the federal courts would  lack jurisdiction to review any Commission decision to affirm the staff's determination (see Amalgamated Clothing & Textile Workers Union v. SEC, 15 F.3d 254 (2d Cir. 1994); and
    • Any Commission decision to reject the staff's determination would not be binding on Whole Foods, Mr. McRitchie or even the SEC (see Missud v. SEC, 2012 U.S. Dist. LEXIS 99178 (N.D. Cal. July 17, 2012)).
  • A single Commissioner (it is unclear whether the other Commissioners concurred) directed the staff to change its position from its customary non-committal expression of concurrence to a "we express no view".

The bottom line seems to be that at Chair Mary Jo White's instance, the staff has moved from a non-binding "there appears to be some basis" to a  non-binding "we express no view".

It's Springtime In O.C.!

With a couple of much need rain showers, Orange County has traded its California tan for green:

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