Even the SEC’s new Reg Flex Agenda (which reflect the priorities of the SEC Chair) has now elicited a “dissent” from the two SEC Commissioners on the other side of the political aisle.  In this statement, posted yesterday, Commissioners Hester Peirce and Elad Roisman lambast the new Spring 2021 Agenda for “the regrettable decision to spend our scarce resources to undo a number of rules the Commission just adopted.” While the Agenda contains several “important and timely items”—which they identify as rules related to transfer agents and government securities alternative trading systems—the absence of other items was notable, including important rulemakings that would “provide clarity for digital assets, allow companies to compensate gig workers with equity, and revisit proxy plumbing.” (Of course, two of those rulemakings were not entirely absent, but have instead been moved to the long-term agenda.  See this PubCo post.) Perhaps, they suggest, too much attention to undoing existing rules rather than creating new ones? 

The two Commissioners charge that SEC Chair Gary Gensler’s recent directive to revisit recent rulemakings regarding proxy voting advice was “just the opening salvo in an effort to reverse course on a series of recently completed rulemakings” (see this PubCo post), identifying as problematic proposed items on the agenda relating to proxy advice and shareholder proposals under Rule 14a-8 (see this PubCo post), the resource extraction payment disclosure rules (see this PubCo post), the accredited investor definition and integration framework (see this PubCo post), and the whistleblower rules (see this PubCo post). These rules, they argue, have only recently been adopted and, to the Commissioners’ knowledge, the SEC has received no new information that “would warrant opening up any of these rules for further changes at this time. We are disappointed that the Commission would dedicate our scarce resources to rehashing newly completed rules.”

The SEC doesn’t exactly give short shrift to the rulemaking process, they contend. Under the Administrative Procedure Act, the SEC employs a rigorous lengthy rulemaking process, and, for most of the rulemakings that are apparently now going to be reopened, there was an even more elaborate process to obtain public input, including roundtables  and concept releases. According to Peirce and Roisman, a

“change in administration naturally brings changes in policy, and the Agenda reflects that shift in the form of new rulemakings, but reopening large swathes of work that was just completed without new evidence to warrant reopening is not normal practice. Past Commissions have generally refrained from engaging in a game of seesaw with our rulebook. The inclusion of these rules in the Agenda undermines the Commission’s reputation as a steady regulatory hand. While we will keep an open mind on each proposal, it is hard to see how the Commission could change course on such complex matters before the Commission’s latest actions have fully taken effect.”

Posted by Cydney Posner