SEC Grants No-Action Relief to Activist Shareholders
Harvard Law School (04/19/2009) Gallardo, Eduardo; Moloney, James J.; O'Grady, James B.
The Securities and Exchange Commission (SEC) has issued two no-action letters to Eastbourne Capital Management and funds affiliated with Carl Icahn clarifying that a dissident shareholder can obtain authority to vote for the nominees of another dissident shareholder in order to round out a "short slate" of director nominees for election at the same annual meeting. Eastbourne and the Icahn-affiliated funds have nominated five individuals to join the 12-member board of Amylin Pharmaceuticals. As a result of the SEC's reading of the proviso to the "bona fide nominee" rule in Exchange Act Rule 14a-4(d), some or all of their nominees can appear on each other's proxy cards. However, Eastbourne and the Icahn-affiliated funds must not have agreed to, and must have no intention of, forming a "group" as determined under Regulation 13D-G. Also, they cannot actively recommend the election of the other's nominees, and must direct their proxy solicitors not to do so as well. In the past, the proviso has been limited to allowing a soliciting shareholder to "round out" its short slate with nominees of the registrant.
