TheCorporateCounsel.net

The SEC’s notable absence from the joint agency action on Section 956 of Dodd-Frank Act inevitably makes one wonder, where are we on SEC rulemaking? It will probably be another month or so before we see the updated Spring Reg Flex Agenda, but the overall timing now makes things interesting as we enter the throes of a Presidential election cycle. Conventional wisdom used to be that the SEC, like other government agencies, would slow down or stop its rulemaking activity as we enter the summer before a Presidential election. This approach made sense for a variety of reasons, given that agencies would not want to have controversial proposals interfere with election year politics, and agencies generally wanted to avoid going to all of the trouble of writing a rule only to have it invalidated under the Congressional Review Act, should the political winds shift against the party in power.

Unfortunately, nothing approaching “conventional” or having to do with “wisdom” prevails in the political state as we know it today, so we have the most recent example of the last six months of the Trump Administration, when the SEC was furiously adopting rules into late December, even after the political winds had in fact shifted and the outcome of the election was known (at least to some), which seemed quite odd. Given that precedent, it is certainly possible that we could see the same scenario play out again in terms of the SEC continuing to propose and adopt rules through the remainder of this year. Remaining out there on the rulemaking agenda are some other controversial items, such as revisiting the definition of “held of record” (and thereby forcing unicorns to register under the Exchange Act) and revisiting Regulation D to address reliance on that exemption from registration by large private issuers. Only time will tell whether these proposals see the light of day.

– Dave Lynn