The court gave the SEC 30 days to "correct the defects in the rule."
On May 3, the SEC finalized the rule requiring companies to disclose daily stock buyback information either quarterly or semiannually. The required disclosures include the number of shares repurchased each day and the average price paid on that day.
Also under the rule, companies have to check a box indicating whether certain directors or officers traded in the relevant securities within four business days before or after the public announcement of an issuer's buyback plan or program.
Since the rule was finalized, the fight over stock buyback disclosures has picked up.
The U.S. Chamber of Commerce, the Texas Association of Business and the Longview Chamber of Commerce in May filed the lawsuit challenging the initiative, arguing that the SEC rule discourages companies from using stock buybacks and violates the APA and U.S. Constitution.
The court in electing not to vacate the rule entirely dismissed most of the plaintiffs' claims, except for the cost-benefit analysis violation.
Tom Quaadman, executive vice president of the U.S. Chamber's center for capital markets competitiveness, said in a statement that the appellate court decision is "a victory for the ability of companies to make business decisions free from government micromanagement. Stock buybacks are an important tool for companies to grow their businesses and return value to shareholders — including millions of Americans saving for retirement. The court ruled that the SEC acted arbitrarily and failed to substantiate the costs and benefits of its rule, which reflects deeper problems regarding the commission's rule-making process."
When asked for comment on the ruling, an SEC spokesperson said the agency is "reviewing the decision."
Global stock buybacks in 2022 reached an all-time high of $1.3 trillion, 22% higher than the previous year, according to research from asset manager Janus Henderson Investors.