August 27, 2020
Sometimes I go on a rant when it comes to regulatory idiocy. Today is more of a rampage. At the moment, my anger is directed at "SEC Monitoring Impact of Hurricane Laura on Capital Markets" (SEC Release / August 26, 2020) https://www.sec.gov/news/press-release/2020-194 The SEC Hurricane Laura Release starts off with this advice:
The Securities and Exchange Commission is closely monitoring the impact of Hurricane Laura on investors and capital markets.
The SEC divisions and offices that oversee companies, accountants, investment advisers, mutual funds, brokerage firms, transfer agents, and other regulated entities and investment professionals will continue to closely track developments. They will evaluate the possibility of granting relief from filing deadlines and other regulatory requirements for those affected by the storm. Entities and investment professionals affected by Hurricane Laura are encouraged to contact Commission staff with questions and concerns: . . .
What exactly is there for the SEC to be monitoring about Hurricane Laura? The federal government runs the National Hurricane Center, which is part of the National Weather Service, which is part of the National Oceanic and Atmospheric Administration. Yesterday, August 26, 2020 (the same date of the SEC Hurricane Laura Release), the National Hurricane Center ("NHC") posted the following advisories about Hurricane Laura posted on its website https://www.nhc.noaa.gov/
...CATASTROPHIC STORM SURGE, EXTREME WINDS, AND FLASH FLOODING EXPECTED ALONG THE NORTHWEST GULF COAST THIS EVENING... ...WATER LEVELS RISING ALONG THE COAST OF SOUTHEAST TEXAS AND LOUISIANA...
This morning, August 27th, NHC has updated its website advisory to:
...HURRICANE CONDITIONS SPREADING FARTHER INLAND ACROSS SOUTHWESTERN LOUISIANA... ...CATASTROPHIC STORM SURGE, HURRICANE FORCE WINDS, AND FLASH FLOODING WILL CONTINUE THIS MORNING...
So . . . in case I'm missing something here, the NHC is warning us that Hurricane Laura has a "catastrophic" storm surge. As such, just what, exactly, is the SEC so closely monitoring? Y'all think that a catastrophic storm surge isn't going to have some kind of detrimental impact on "investors and capital markets?"
Frankly, the SEC's job here isn't that different from NHC's. The SEC should forecast and try to get ahead of what the federal regulator thinks is coming. The time for idle introspection and pondering is long past. Don't announce that you are monitoring an oncoming storm. Announce that you have implemented various proactive measures to respond to the likely impact of the storm upon investors and the markets.
Divisions and Offices and Lions and Tigers and Bears, Oh My!
The wordsmiths at the SEC proclaim that it isn't just the "Securities and Exchange Commission" that's watching the storm, but, oh my, there are "divisions and offices" involved! What a shocking revelation for all to read. On top of that, beyond the SEC's mere "closely monitoring" of the hurricane, we are told that the SEC's divisions and offices are going to "closely track developments." That's a double dip of bureaucratic closeness. Given how carefully the federal regulator is when it chooses the many words that it publishes each day, we are left to parse through the difference between the overall organization's "monitoring" versus the "tracking' that will be undertaken by the divisions and offices that the SEC comprises. In my mind's eye, I envision the good folks at the SEC in raingear with outstretched umbrellas staying up all night with their hands out their division's and office's windows testing to see if raindrops are falling. And as the hurricane rumbles inland, as the flooding worsens, as the thunder increase, as the lightning illuminates the devastation, the SEC takes this moment in time to regale us with the dubious disclosure that its many divisions and offices "oversee companies, accountants, investment advisers, mutual funds, brokerage firms, transfer agents, and other regulated entities and investment professionals." Wow -- who knew?
Evaluate the Possibility of Granting Relief
According to the SEC Hurricane Laura Release, the purpose behind its close monitoring and tracking of Hurricane Laura is to:
evaluate the possibility of granting relief from filing deadlines and other regulatory requirements for those affected by the storm. Entities and investment professionals affected by Hurricane Laura are encouraged to contact Commission staff with questions and concerns:
In the aftermath of what was forecasted by NHC as a likely CATASTROPHIC storm but has now sadly become a reality, the SEC is still only prepared to evaluate. Evaluate? Evaluate just what exactly? The anticipated death and destruction? And why at this late hour is the SEC still contemplating merely the possibility of granting relief from filing deadlines and other regulatory requirements for those affected by the storm? When will the SEC's evaluation transition from possibility to reality?
If the SEC simply read the NHC advisories, it would have concluded that a horrific storm was going to slam into the United States with dire consequences. If the SEC turned on the radio or television this morning, it would have witnessed that reality. Rather than crank out self-serving, nonsensical press releases, the SEC should have anticipated the horrific toll of this hurricane and published on August 26, 2020, a blanket, short-term waiver from deadlines and requirements. If it turns out that the hurricane's impact on the SEC deadlines and requirements is minimal, then the SEC could quickly terminate the waiver and chalk up its premature intervention to abundant prudence. If, on the other hand, the hurricane lives up to its catastrophic moniker, then the SEC would have had the satisfaction of having preemptively done the right thing. Imagine that!
A Lack of Comprehension
What part of C-A-T-A-S-T-R-O-P-H-I-C aren't you folks at the SEC quite comprehending? As if the hurricane isn't enough, should I also spell out the added impact of C-O-V-I-D for you? As such, just how the hell do you expect the "entities and investment professionals affected by Hurricane Laura" to contact you with questions and concerns?
While they're clinging to their roofs as their homes float out to sea?
While they're in an ICU, do you want them to remain on hold when they telephone the SEC but get the SEC's voicemail?
Going from the absurd to the ridiculous, the SEC Hurricane Laura Release suggests that:
Individuals experiencing problems accessing their securities accounts or with similar questions or concerns relating to the hurricane are encouraged to contact the SEC's Office of Investor Education and Advocacy by phone at 1-800-SEC-0330 or email at email@example.com.
Oh for godsakes, seriously?
My home is destroyed.
My car floated away.
We can't find the family dog.
Grandpa was in the emergency room with COVID and we're not sure if the hospital is still standing.
And you think that I'm not only reading your idiotic press release while the floodwaters are rising but my focus is on accessing my securities accounts? And you truly believe that when I experience problems accessing my securities accounts that some human being at OIEA is actually going to answer my calls and log on to my day-trading account to let me know how much margin I can trade?
Then there's that other lovely suggestion about sending email to "firstname.lastname@example.org."
There's no power grid.
The hurricane took everything out and down.
I can't charge my cellphone.
My laptop has been submerged for the better part of the day.
Sure, let me email y'all; and, by the way, what's your turnaround time at "email@example.com?" Last I heard, you were getting back to folks who emailed you within something south of a millennium but north of a week to ten days. And, no, your standard form email response that acknowledges your receipt of my email. tells me how valuable I am to the SEC, and assures me that someone will reply is not comforting.
Vigilance and Vigorous
Finally, just to push the broom at the end of this SEC circus parade, consider this final portion of the SEC Hurricane Laura Release:
Investors should be vigilant for Hurricane Laura-related securities scams and check the background of anyone offering them an investment by using the free and simple search tool on Investor.gov. The Division of Enforcement will vigorously prosecute those who attempt to defraud victims of the storm. The SEC is asking investors to report any suspicious solicitations at www.sec.gov/complaint/tipscomplaint.shtml.
An all too typical bit of useless advice from an all too typical government bureaucracy. Investors should be vigilant for hurricane-related scams? Ummm, isn't that the whole raison d'etre of the SEC? I'm holding my breath in floodwaters and bobbing up and down like a cork just trying to survive, y'all at the SEC think you could do me a favor and handle the "be vigilant" thing for me? Sure, I appreciate that you have a "free and simple search tool on Investor.gov" but if I've lost my home, my business, and my family to the hurricane, and maybe, just maybe, I won't be thinking about your web-based application. It's not that I'm annoyed when you promise to "vigorously prosecute those who attempt to defraud victims of the storm," but, I need to get through this storm first and you don't quite seem to understand that. You're sending out a press release. I'm trying to survive a catastrophe.