SEC Wants Financial Reform Comments Before Regs

For all you corporate secretaries, general counsel, directors, compensation committee chairs and anyone else involved in corporate governance, your chance to chime in on the anticipated new financial reform regulations is now. As in before the proposed rules or concept releases are even released to the public.

Following up on her commitment to get as much public comment on these historic reforms (a total of 243 rules in total for several federal agencies, including 95 for the SEC), SEC Chair Mary Schapiro announced late last month an unprecedented decision to open up the process so early.

“We recognize that the process of establishing regulations works best when all stakeholders are engaged and contribute their combined talents and experiences,” Shapiro said in a July 27  statement. “We look forward to preliminary public comments in these areas.”

The SEC has set up a page divided into 11 categories reflecting the different areas addressed by the Dodd-Frank Act. Each category has links to a Web comment form, an email address and a page of comments already received. Of those 11 categories, there are three that concern most of you:

• Title VII — Wall Street Transparency and Accountability (pertaining to the sale, clearing and governance of hedging instruments such as swaps)
• Title IX — Investor Protection and Improvements to the Regulation of Securities (regarding Office of the Investor Advocate, SEC whistleblower program, credit rating agency review, asset-backed securities, share lending and “proxy plumbing,” and executive compensation)
• Other (other initiatives to be undertaken by the SEC in response to the Dodd-Frank Act)

The New York Times business section on July 28 had a good, thorough report on Schapiro’s actions [SEC Expands Process For Public Comments on New Financial Rules] as did Melissa Klein Aguilar of Compliance Week in her blog on Tuesday [SEC Open for Dodd Frank Rulemaking Comments -- membership required].

Broc Romanek, in TheCorporateCounsel.net blog on July 27, added that the SEC has “newly-established best practices when holding meetings with interested parties.” He goes on to list them:

• Staff will try to meet with any interested parties seeking a meeting. When the number of requests exceeds availability, the staff will seek out parties with varying viewpoints. Staff may have to limit the number of meetings with similarly situated parties and will limit multiple meetings with the same party.
• Staff will reach out as necessary to solicit views from affected stakeholders who do not appear to be fully represented by the developing public record on a particular issue.
• Staff will ask those who request meetings to provide, prior to the meeting, an agenda of intended topics for discussion. After the meeting, the agenda will become part of the public record.

• Meeting participants will be encouraged to submit written comments to the public file, so that all interested parties have the opportunity to review and consider the views expressed.

In the end, it seems like the SEC staff is trying to be more inclusive in the rulemaking process. And since the agency is about to possibly double the size of its staff, it would make sense to allow for more public input. For once, it seems the SEC will have enough people to properly deal with such a high level of rulemaking.

However, with that said, I looked at the early comments up on those pages (35 as of July 29 from about 10 or so people) and they read more like an online chat room or blog comments than constructive debate on the issues. Take a look at some of the early comments here. Where there are comments, a “comments available” link is set up.

- Gary Larkin