October 22, 2013

SEC to Propose Crowdfunding Rules Tomorrow – With Short Sunshine Act Notice

Ahem. I stand corrected. I took to Twitter yesterday to tweet about how some mass media outlets got it wrong last week when they reported that the SEC would hold an open Commission meeting on October 23rd to propose crowdfunding rules as required under the JOBS Act. I figured that since it was Monday and the SEC hadn’t yet posted a notice about the open meeting, it must not be happening on Wednesday.

I was wrong. Last night, the SEC did indeed post a Sunshine Act notice about an October 23rd meeting. Less than 48 hours before the meeting. I’ve blogged before that as noted in Section (e)(1) of that Act, the notice must be announced at least one week before the meeting.

But there is an exception to the one week period if “a majority of the members of the agency determines by a recorded vote that agency business requires that such meeting be called at an earlier date.” So the agency likely has a recorded vote of this expedited matter somewhere. I recall that the SEC’s pay ratio meeting also was held less than one week after the notice. So this might be a new trend for the SEC.

As noted in this WSJ article, 8 Senators sent a letter to the SEC yesterday asking why the crowdfunding proposal is late…

Why Might the SEC Provide Short Notice for an Open Commission Meeting?

You are wondering why – given that the crowdfunding rule proposal is significantly behind schedule – the SEC would provide such a short notice period for this open Commission meeting, particularly when the media knew last week on which date the meeting date was set? Getting beyond that the purpose of a one week notice period has been negated by the fact that open meetings are now video webcast – so there is no reason to make travel plans to come to DC to see the meeting – here is my guess:

This sort of delay is extreme, but not unprecedented. Sometimes, delaying a meeting is a tactic used to extract last minute concessions on a rule. The Commission’s duty officer must approve the Sunshine Act notice – and a duty officer with a beef can hold up the seriatim until they get what they want. Particularly on something that was up against a likely 3-2 vote, one of the minority Commissioners could wield some power if one happened to be the duty officer (and a swing vote Commissioner could wield lots of power). The SEC’s Secretary and Office of General Counsel could then certify that exigent circumstances necessitated the delay and a majority of the Commissioners would approve the duty officer action seriatim.

I’m not sure that any of this is what’s going on here – it’s a total guess – but the Republican commissioners have been critical of the SEC’s anticipated approach to crowdfunding.

Open Commission meeting days are set internally in advance to coordinate across all five Commissioner calendars. It’s not as easy to find a date that works for all five Commissioners as you would think. Learn more about how the SEC works from last year’s webcast on the topic…

Today’s Spreecast: “Latest Corp Fin Comment Letter Trends”

Come participate in the spreecast – “Latest Corp Fin Comment Letter Trends” – at 2 pm eastern today! During it, Keir Gumbs of Covington & Burling LLP will describe the latest comment letter trends from the SEC’s Division of Corporation Finance. To access the spreecast, go here at 2 pm eastern. Please print out these slides in advance. [Note that a new spreecast has been calendared for November 13th: “Crafting SEC Rulemaking Comment Letters.”]

Here are FAQs about how spreecasts work – but the upshot is you have to register for Spreecast first (although it’s possible to watch without registering if you close a prompt). Simply sign up by using an email address by clicking the “Or sign up via email” link in the upper right hand side of the site (it’s in small print under the “Connect with Facebook” logo).

– Broc Romanek