You know how the rest of the saying goes, “and we’re here to help.” As discussed in more detail below, you can see this practice in action in the SEC’s invitation for advance comment on rulemaking under the financial reform act released in July, and the SEC’s invitation for comment on the impact of its ‘International Financial Reporting Standards (IFRS) Workplan” released earlier this year. Additionally, in remarks
at a U.S. Chamber of Commerce conference in July, SEC Chairman Mary L. Schapiro noted: “the path forward still poses significant challenges. But to be fully successful in meeting those challenges, it will require broad engagement—that means business, regulators, consumers and investors alike.”Washington Policy Conference
Such engagement will be evident at FEI's upcoming Washington Policy Conference
Sept. 20-21 at the Washington Court Hotel on Capitol Hill. Keynote remarks will be provided by SEC Commissioner Kathleen L. Casey,
IRS Commissioner Douglas Shulman
, and former GAO Comptroller General David M. Walker
, who currently serves as President & CEO, Peter G. Peterson Foundation. Other high level government and business representatives (CFOs, Chief Tax Officers, Treasurers and others) will provide their perspectives on various panels; see the full agenda
and list of speakers
; register here
. FEI members (and our new category of Associate Members
) save money registering for this and other conferences, webcasts and events; the conference also welcomes non-members.SEC Seeks Advance Comment on Rulemaking
Shortly after the President’s signing of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC announced: SEC Chairman Schapiro Announces Open Process for Regulatory Reform Rulemaking.
In brief, the SEC is seeking advance comments for their staff (and Commissioners) to consider as it enters wide-ranging rulemaking required under the Dodd-Frank Act. (Other regulatory agencies will also be entering varying degrees of rulemaking flowing from the Act.)Meetings With SEC Staff Will Be Impacted
Significantly, as observed by Broc Romanek in TheCorporateCounsel.net blog
: “[T]his "field day
" may help to shorten the comment periods and get rules in place before next year's proxy season."
However, he added: "Perhaps even more important is the SEC's "newly-established best practices when holding meetings with interested parties," which include "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.”
Although Broc's views and my views are often on the same page, my views on the potential reduction of staff meetings differ somewhat from his. He states: "Given the level of rulemaking the Staff has on its plate, time management is of the essence and these "best practices" should help curtail wasteful meetings where the same points are made over and over again (and problems are identified but no solutions are proposed)."My Two Cents
(I refer readers to the disclaimer posted on the right side of this blog
.) On the one hand, I don’t recall such a broad request for advance comment on rulemaking, and I believe this move is very positive, with the added benefit of comment letters being posted real-time (as is the standard practice of the SEC.)
On the other hand, it can be challenging to provide substantive, practical comments on potential rulemaking prior to having some verbal if not written skeleton of potential alternative draft rulemaking (albeit comment periods will continue to take place on formal proposed rulemaking as usual). However, the pre-proposal brainstorming stage is where the verbal back and forth at meetings between constituents and staff (or Q&A at conferences) can be very helpful, to discuss various potential areas of thinking or directions the SEC staff (or other regulatory agency staff, as applicable) may consider even before they are at the stage of proposed rulemaking. (For example, as we see at PCAOB advisory group meetings and roundtables, and at SEC advisory group meetings and roundtables; more about the PCAOB further below.)
Hopefully increases to the SEC staff budget will allow meetings with constituents to continue relatively apace and still meet the Commission’s goals of transparency.Sample of comment letters
The SEC’s request for comment on the Dodd-Frank Act covers 9 major areas. I recently took a look at the letters in the “Other
” category (so far 31 letters, dated as of Sept. 2, in that category.). The letters included, among others: a letter from Arnold & Porter on behalf of the State of Alaska
urging the SEC to include States in the definition of “accredited investor,” a letter filed by Meridian Fund Advisers
re: “The Need for Corporate Governance Reforms or Established Corporate Governance Best Practices for Hedge Funds,” numerous letters admonishing the SEC and Congress for reducing access to SEC documents under the Freedom of Information Act (FOIA
), including one from a self-proclaimed whistleblower/Compliance Accountant Joe Jefferis,
a letter from SIFMA
on the importance of the upcoming GAO study of GASB
. There are also some letters from a self-identified Citizen Voter
and a Professor of Common Sense.
My sense is that it is early in the process for specific advance comment on certain rulemaking-related matters throughout the Dodd-Frank Act, and, as usual, comments will follow from specific proposed rulemaking.
The most recent letter I noted in the file (dated Sept. 2) was sent by attorney Herbert Milstein
, a former Associate Director of Enforcement in the Division of Corporate Finance [note: corrected title from original blog post]
at the SEC (now with law firm Cohen Milstein Sellers & Toll PLLC), who writes that he represented a plaintiff in a case in which workpapers were requested from an oversees entity of a Big 4 international accounting firm, but the law in that country (China, in this case) precluded the international division of the firm from providing the requested documents.
Milstein notes some remarks taken from the transcript of the trial, and concludes in his letter to the SEC:
"I respectfully submit that it is in the interest of the Commission, the U.S. securities markets, and investors such as the state and municipal pension plans that my firm routinely represents, that the Commission adopt a rule that mandates that any company whose securities are registered to trade in the U.S. markets choose, as its outside auditor, a firm that has consented to the jurisdiction of the United States courts for service of process or subpoena and which has agreed to produce work papers and other documents relevant to its work for the company if they are validly requested in U.S. civil litigation." SEC Request for Comment On IFRS Workplan
Separately, as noted by Compliance Week’s Melissa Klein Aguilar in her post last month in The Filing Cabinet
, the SEC released two separate requests for comment in August relating to its IFRS workplan, one regarding the impact on investors, and one regarding the impact on issuers.
In related news, there is some conjecture among journalists, bloggers, affected parties and others as to what the future of IFRS will be, with the previously reported early retirement decision of Robert H. Herz to leave the FASB board, and with IASB Chairman Sir David Tweetie's scheduled retirement from the IASB board in 2011, as noted in this recent article by Mario Christodolou in AccountancyAge, Bringing the US on Board
.PCAOB Reopens Comment Period-Commun. w/Audit Comm.; Roundtable Coming
We can also see 'we're from the government and we're here to help" (or, in this case, we're from the quasi-governmental agency and we're here to help) in action with the PCAOB's recent announcement that it is (1) reopening the comment period
on its proposal on communication with audit committees - something of keen interest to auditors, board members, and senior financial officers, and (2) holding a public roundtable Sept. 21
on this subject. The roundtable will be webcast. The PCAOB notes that in light of the roundtable, it is extending the comment period on the proposal until October 21. Here is the PCAOB's Briefing Paper
for the roundtable; see also the Proposed Rule
filed so far.Hard-Working Agency
Rounding out this post, I recently received my 2010 edition of the SEC Alumni Association (more formally known as the Association of SEC Alumni or ASECA
) Newsletter, which included the full text of the speech made by former Enforcement Director Bill McLucas
, (now with law firm WilmerHale), recipient of the William O. Douglas Award, at the annual ASECA awards dinner in March. I found the following sections of McLucas' remarks among the most powerful:
I want to say a word to the Commission staff who are here this evening. All of us – perhaps especially those of us who do battle with you daily and challenge you on a variety of fronts as we represent our clients, have been and will remain enormously supportive of this agency and most importantly, its mission. We’ve all heard the criticism and the attacks that have been mounted against the SEC over the past two years. Whatever criticism the agency has endured – and while some of it may well be fair, much of it has been misplaced in my view – I know the agency has taken it seriously and taken steps to address the issues, real or perceived. …
You need to keep your focus, keep in mind all the successes the agency achieves for investors, most of which do not get the attention you’d like in this climate. You have to keep moving ahead…. First, you have strong leadership from the Chairman and the Commission….Second, notwithstanding some tough days that have demoralized the agency, the staff is still among the best in government and the leadership team at the division and office levels is outstanding and as strong as it has ever been….[See McLucas’ complete remarks.]
I encourage you to visit ASECA's
website, as well as that of the SEC Historical Society
. I continue to believe that people who commit themselves to public service, for a period of time or as a life-long career, and those who leave such agencies to go to -as some in public service refer to with a wink - 'the dark side,' (i.e. the private sector, such as law firms, accounting firms, the corporate and financial sector) - and practice in the private sector armed with not only knowledge of how an agency works, but with an eye toward what is right, can enhance the regulatory system and the business environment generally. To reemphasize what McLucas noted above, "those of us who do battle with you daily and challenge you on a variety of fronts... have been and will remain enormously supportive of this agency and ... its mission."