SEC Commissioners Question Legality of Harvard Declassification Shareholder Proposals

SEC Commissioner Daniel Gallagher and former Commissioner and current Stanford law professor Joseph Grundfest co-authored a paper asserting that the Harvard Shareholder Rights Project (the "SRP") repeatedly violated Exchange Act Rule 14a-8 ("Shareholder Proposals") of the Exchange Act by submitting materially false and misleading shareholder proposals for inclusion in annual proxy solicitations.

Rule 14a-8 requires U.S. public companies to include shareholder proposals in their annual proxy solicitations, but also requires that such proposals not contain "materially false or misleading statements" in violation of Exchange Act Rule 14a-9 ("False or Misleading Statements"). According to Commissioner Gallagher and Professor Grundfest, the SRP violated the Rules by submitting shareholder proposals that materially misrepresent empirical academic research on the effect of classified boards on corporate financial performance.

See: "Did Harvard Violate Federal Securities Law? The Campaign Against Classified Boards of Directors," by Daniel Gallagher and Joseph Grundfest.