The Securities and Exchange Commission allows some people to have a privileged channel for communicating their views to SEC commissioners and staff on proposed rules.
That is unfair to the public, and subverts the purpose of public comments.
With any proposed rule, the SEC explicitly solicits public comments to assist in determining sentiment on a potential action, SEC officials also use the comments to determine what, if any, changes the commissioners should make in the proposal and whether they should adopt the proposal. Likewise, the public has access to the comments, all posted online, serving to influence its views based on interests, experience, theory or other reason, as well as revealing the reaction of corporations, other organizations or people directly affected by a proposed rule.
But there is a channel of communications on rule proposals the SEC keeps confidential.
Included in the lists of public postings of comments to proposed rules is a series of individual “memorandums” on meetings between either an SEC commissioner or SEC staffers and representatives of corporations or organizations. Each memo notes only that the meeting took place; there is no information on views put forth or exchanged.
It's unfair because while other commenters have their views made known, those who arrange meetings get to keep their views confidential.
With the SEC's proposed proxy access rule, while many corporations, organizations and individuals have submitted comment letters, some have put forth views only in these private meetings.
In denying a Freedom of Information Act request for minutes, notes or summaries of such meetings, Brenda L. Fuller, an SEC freedom of information/privacy acts branch chief, acknowledged notes were made of meetings, but she denied access to them. In part, she responded to the request by asserting: “Withholding the notes will encourage open, frank discussions on matters of policy between subordinates and superiors; protect against premature disclosure of proposed policies before they are finally adopted ...”
The arrangement of such SEC meetings is arbitrary. “We have no regulations (on) how (SEC officials) arrange their calendars or what criteria are used to arrange meetings,” said John Heine, SEC spokesman.
If the SEC wants to be truly a shareholder advocate, it needs to make the substance of these meetings public.