A few weeks ago, two senior members of the House Committee on Financial Services – Randy Neugebauer (R-TX) and Scott Garrett (R-NJ) – sent this letter to SEC Chair Shapiro requesting that the SEC “refrain from undertaking any important or controversial initiatives, including significant rulemakings” until Dan Gallager is confirmed by the Senate to fill the seat recently vacated by Commissioner Casey.
While on its face, this request appears noncontroversial and logical. But I don’t recall ever seeing a similar request to any federal agency in this town – and the reality is that it’s pretty common for a federal agency’s Commission to be operating at less than “full strength.” The appointment process is time-consuming and often not at the top of a Presidential agenda. In fact, I recall during an extended period of time during my last tour of duty at the SEC that the Commission only had two Commissioners – Chair Arthur Levitt and Commissioner Steve Wallman – from July ’95 til February ’96. President Bill Clinton left many agencies with unfilled slots during his initial years in office, a common occurrence when there is turnover in the Oval Office. [Here’s a chart if someone wants to conduct the analysis and tell us how often the SEC has had less than 5 Commissioners.]
So if this request was to become the norm, at least one agency or another – if not many more – would be at a standstill for extended periods of time. And this also could lead to shady dealings such as a Commissioner threatening to quit – and thus stall a rulemaking – in order to pressure changes to a rulemaking that the other four Commissioners don’t want. The SEC is supposed to be an independent agency but constant Congressional interference has made it challenging for it to do its job properly. Please make it stop…
The Battle of the New Corporate Entities: Flexible Purpose Corp vs. B Corp
As noted in the “Triple Pundit Blog,” the Benefit Corporation (B Corp) – a new type of corporate entity that purports to use business to address environmental and social problems – passed the California State Assembly. California joins a few other states – Maryland, Vermont, New Jersey, Virginia and Hawaii – in passing Benefit Corp legislation.
I haven’t been following the B Corp saga but quickly learned that the B Corp has been getting most of the publicity even though another new entity – the Flexible Purpose Corp – was introduced first before the California legislature by more than a year. Last week, the California bill creating FPCs (SB201) passed the California Senate unanimously and the Assembly by a vote of 52-21. Now, both the FPC and B Corp bills are sitting on the California Governor’s desk for signature.
FPCs appear preferable over B Corps by those that know better. According to those that I talked to, there is nothing that the B Corp sponsors want to do under their bill that they can’t do under the FPC bill – but the FPC is a broader entity that allows for greater shareholder rights (eg. the shareholders and not the legislature determines the social and environmental goals of the company). To learn more why the B Corp is a bit of a disaster, read this letter from the California Corporations Committee of the Business Law Section of the California State Bar. Given these flaws, the California Corporations Committee has stated that it prefers the Flexible Purpose Corp.
My sources tell me that Bar Associations of the other states that have adopted B Corp legislation now object to B Corps due to many of the same issues identified by the California Committee. So my money is on the Flexible Purpose Corp as the entity that could have staying power. Read more in “Flexible Spending Corp” Practice Area, including this B Corp opposition letter from Steve Hazen, FAQS on the California bill, etc.
Webcast: “Preparing for the SEC’s New Whistleblower Rules: What Companies Are Doing Now”
Tune in tomorrow for the webcast – “Preparing for the SEC’s New Whistleblower Rules: What Companies are Doing Now” – to hear Sean McKessy, Chief of the SEC’s Whistleblower Office, David Becker of Cleary Gottlieb, Allegra Lawrence-Hardy of Sutherland Asbill, Steve Pearlman of Seyfarth Shaw, and George Terwilliger of White & Case explore the latest developments in what companies are doing, and the issues that companies should consider, when adopting changes to their whistleblower policies and procedures.
– Broc Romanek