March 8, 2016

The SEC Has Three Commissioners: Impact on Rulemaking

As I blogged yesterday, the Senate is likely to confirm the two SEC Commissioner nominees soon – but it’s still interesting to read this excerpt from a WSJ article that explains the issues of being stuck at a level of three SEC Commissioners:

Securities and Exchange Commission Chairman Mary Jo White has struggled at times to advance post-crisis rules through an often-fractious commission. This year, her fourth and likely her last, could be even tougher, due to the agency’s depleted ranks. That could leave undone a raft of rules on issues that tend to split the commission along party lines, including: unfinished executive compensation curbs required by the 2010 Dodd-Frank financial law; restrictions on mutual funds and exchange-traded funds; and new disclosure requirements about the diversity of company directors.

While ideological splits have hampered Ms. White’s term from the start, she now faces a new hurdle for getting things done. SEC rules require a three-person quorum for the agency to pass a regulation, bring a civil lawsuit, or take virtually any other action not delegated to staff. And the five-member commission is now down to just three members, after two left late last year. So the quorum rule effectively hands any individual commissioner veto power over SEC action he or she doesn’t support. By simply refusing to show up to a vote, a dissenting commissioner can block the agency from acting altogether. President Barack Obama has nominated two candidates, but the Senate has yet to hold hearings, and it’s unclear when, if ever, they’ll confirm his choices. In other words, the legislative gridlock now stymieing Washington could spread to regulatory gridlock.

FCPA: SEC Enters 1st Deferred Prosecution Agreement with Individual

Here’s an excerpt from this blog by Steve Quinlivan:

The SEC has entered into its first deferred prosecution agreement with an individual in an FCPA case. One interesting fact is it’s hard to figure out what this person allegedly did that was wrong. The FCPA Professor notes the only specific allegation about the individual in the DPA is the first paragraph which merely identifies the person. There is no other specific allegation regarding him including how he caused violations of the FCPA’s books and records and internal controls provisions, and the individual did not admit or deny any of the allegations in the DPA.

March-April Issue: Deal Lawyers Print Newsletter

This March-April issue of the Deal Lawyers print newsletter was just posted – & also mailed – and includes articles on (try a 2016 no-risk trial):

– Spin-Offs: Frequently Asked Questions
– More Reminders That “Boilerplate” Matters
– Short-Term Investment Strategies Can Create Board Conflicts of Interest
– Delaware’s Latest M&A Export to Other States: Streamlined Tender Offers & Section 251(h)
– A Russian Proverb Explains Investor Approaches to Risk Management

Remember that – as a “thank you” to those that subscribe to both & our Deal Lawyers print newsletter – we are making all issues of the Deal Lawyers print newsletter available online for the first time. There is a big blue tab called “Back Issues” near the top of – 2nd from the end of the row of tabs. This tab leads to all of our issues, including the most recent one.

And a bonus is that even if only one person in your firm is a subscriber to the Deal Lawyers print newsletter, anyone who has access to will be able to gain access to the Deal Lawyers print newsletter. For example, if your firm has a firmwide license to – and only one person subscribes to the print newsletter – everybody in your firm will be able to access the online issues of the print newsletter. That is real value. Here are FAQs about the Deal Lawyers print newsletter including how to access the issues online.

Broc Romanek