July 3, 2012

SEC Announces Intention of Adopting Corp Fin Rules – In Late August

Yesterday, the SEC posted a Sunshine Act notice that it will consider a trio of Corp Fin rulemakings at an open Commission meeting on Wednesday, August 22nd. The trio of rulemakings is: conflict minerals, resource extraction and the elimination of the prohibition against general solicitation under Regulation D – the first two being Dodd-Frank rulemakings and the last one under the JOBS Act. We are in the process of pushing back our “JOBS Act Update: Where Are We Now” webcast to a date in early September so that this development can be covered soon after it happens.

The SEC’s announcement is more than 7 weeks in advance of the meeting, a much longer notice period than I can recall for any other open meeting. A single week is typical. Here are a few theories why the notice is so early:

– Stave off Congressional pressure? As noted in this WSJ article last week, 58 Congressfolk sent a letter to SEC Chair Schapiro asking why the SEC has missed the April 2011 deadline for the mining and resource extraction rulemakings. Perhaps because these rulemakings are among the most challenging rulemakings that the Staff has had to do in a long time, as the subjects are way outside the traditional securities laws. Interestingly, this notice comes out after Congress has gone on recess.

– Response to Oxfam America lawsuit that SEC wasn’t rulemaking fast enough? As I blogged recently, an activist group has sued the SEC to compel it to act on the resource extraction rulemaking. Perhaps this was in response to the lawsuit to make it go away.

As for the Regulation D rulemaking, note that wording of Item 3 in the notice doesn’t state that the SEC will consider whether “to propose” the rule. The wording of these descriptions are vetted carefully, so the absence of the term “propose” could imply an interim final rule, or perhaps something else. Recall that the JOBS Act called for this rulemaking to be finished within 90 days of the Act’s passage – Chair Schapiro testified before a House subcommittee last week that the SEC would not make the July 4th deadline. That tight deadline was never realistic…

What is a “Sunshine Act Notice”?

Under the “Government in the Sunshine Act,” the SEC – just like other federal regulatory agencies – must provide notice to the public before holding a Commission meeting. As noted in Section (e)(1), the notice must be announced at least one week before the meeting. There is no upper limit on the notice coming out sooner.

Note that in Section (e)(2) that the meeting date can be easily changed. A change in meeting date must be noticed too – but only as of the “earliest practicable time.” So it could be possible for the SEC to push back the August 22nd meeting date for one – or more – of the three agenda items if need be…

SEC Updates “Implementation of Dodd-Frank Act Rulemaking Timeline” to “Pending Action”

Yesterday, the SEC cleaned up its “Implementing Dodd-Frank” Timeline by removing all of the predictions of when the rulemakings might take place. Instead, all of the outstanding Dodd-Frank rulemakings are simply under a caption labeled “Pending Action.” This relieves the SEC from having to continuously update the timeline each time it misses a prediction…

Ode to Electricity

Seen on my wife’s Facebook status in the wake of a painful, widespread power outage in hot DC:

“Dear Electricity, please come back. I know I took you for granted…just, you know, used you. I miss your wit and charm, your warm glow and how very cool you are…so cool.”

– Broc Romanek