June 2, 2016

The Dumbest Rule Ever (Interim-ly) Adopted…

“No, you’re a stupid head!” Not to drift into a political discussion, but I hate when some folks in Congress complain about the government being too big & how federal agencies have adopted too many rules – but then Congress goes ahead & forces the SEC to adopt something like this interim final rule that was adopted yesterday. This is the stupid rule required by the FAST Act to allow Form 10-K filers to provide a summary of business & financial information. The fact that the adopting release is only 23 pages says it all. Given its foolishness, the SEC wisely made the rule principles-based – allowing companies to fashion their voluntary summary as they wish.

The new rule doesn’t require a summary – it merely allows it. News flash: it was already permissible to do so – as the SEC notes on page 4 of the adopting release. A complete waste of the Staff’s time. And I will ship a t-shirt to anyone who writes a law firm memo solely dedicated to it. [Update: We have a winner of the shirt! Congrats to Kaye Scholer’s Sara Adler!]

This interim final rule will become effective as soon as it’s published in the Federal Register – so within the next week – and folks can comment for 30 days if they want to push the SEC to change it before it becomes “final final.” Don’t be shocked if this rulemaking doesn’t receive a single comment…

Glass Lewis Responds to Proposed Proxy Advisor Legislation

Here’s a blog by Davis Polk’s Ning Chiu about this statement from Glass Lewis KT Rabin about the proposed House bill that would enhance proxy advisor oversight…

SEC’s Budget: Going Down?

Here’s an excerpt from this WSJ article by Andrew Ackerman:

On Wednesday, a House Appropriations subcommittee approved a funding plan for the fiscal year beginning Oct. 1 that for the first time since before the crisis envisions cutting the market cop’s budget, to the tune of $50 million. That would represent a relatively modest decrease to a budget that has steadily grown to about $1.6 billion in the current year from about $900 million in 2007. Still, the House’s proposed decrease is an important inflection point. If adopted, it would mark the first time in a decade that Congress has voted to cut the agency’s budget.

In recent years, House appropriators have generally backed $50 million budget increases to the SEC in proposals widely seen as opening bids in yearlong negotiations between Congress and the administration. The SEC eventually gets a boost as part of end-of-year funding deals for the entire federal government. Such a deal in December granted the SEC a healthy increase of about $100 million—though it came with notable caveats, including a policy “rider” restricting the SEC from requiring public companies to disclose their political-spending activities.

House appropriators say they have sought to hold the SEC’s budget down because it has quadrupled since 2001. By now, funding should be sufficient for the agency to meet its postcrisis responsibilities under the 2010 Dodd-Frank Act and other recent legislation, they say. The move is significant as another sign of the political climate turning hostile to financial regulators, with critics trying to shift the terms of the political debate away from the crisis and onto the burdens of postcrisis rules.

Broc Romanek