Statement of Acting Chair Allison Herren Lee on Contingent Settlement Offers (SEC Release)
(Securities Industry Commentator / February 12, 2021)
https://www.rrbdlaw.com/5687/securities-industry-commentator/#leeAs BrokeAndBroker.com and Securities Industry Commentator readers know, I detest the SEC's unprincipled history of sanctioning corporate fraudsters in one breath, and then, in the next breath, granting them exemptions from "Bad Boy" provisions. In recent months, when asked about who I would like to see installed as the next SEC Chair, my list of candidates tended to include Preet Bharara, Gary Gensler, and Kara Stein. As such, I welcomed Gensler's selection. That being said, former SEC Commissioner Kara Stein would have been a wonderful choice because of her staunch opposition to the SEC's policy of granting knee-jerk-like exemptions to a slew of corporate miscreants . . .
The "SEC Proposed Rules" chart above covers the years from 2016 through November 2, 2022, three Presidential administrations (two Democrats and one Republican), and pre-dates and covers the Covid pandemic. I have offered an extensive set of data so as to avoid allegations of favoritism or biased sampling.
SEC Adopts Rules to Enhance Proxy Voting Disclosure by Registered Investment Funds and Require Disclosure of "Say-on-Pay" Votes for Institutional Investment Managers / Rules and form amendments will enhance transparency of fund and institutional investment manager proxy voting records (SEC Release / November 2, 2022)https://www.sec.gov/news/press-release/2022-198https://www.sec.gov/news/press-release/2022-199
Statement on Final Amendments to Form N-PX by SEC Chair Gary Gensler
https://www.sec.gov/news/statement/gensler-statement-amendments-form-npx-110222, states in part:
I am pleased to support today's final amendments. I'd like to thank the members of the SEC staff who worked on this rule, including:
- Christian Corkery, David Driscoll, Nathan Schuur, Tim Dulaney, Trevor Tatum, Bradley Gude, Angela Mokodean, Brian Johnson, Sarah ten Siethoff, and William Birdthistle in the Division of Investment Management;
- Hanna Lee, Andrew Glickman, PJ Hamidi, Gregory Scopino, Alex Schiller, Julie Marlowe, Michael Willis, and Jessica Wachter in the Division of Economic Risk and Analysis;
- Bob Bagnall, Amy Scully, Natalie Shioji, Malou Huth, and Meridith Mitchell in the Office of the General Counsel;
- Mavis Kelly and Song Brandon in the Division of Examinations;
- Corey Schuster and Andrew Dean in the Division of Enforcement; and
- Dan Chang in the EDGAR Business Office.
Statement on Open-End Funds by SEC Chair Gary Gensler
I would like to thank the SEC staff involved in this proposal, particularly:
- William Birdthistle, Sarah ten Siethoff, Brian Johnson, Angela Mokodean, Mykaila DeLesDernier, Rachel Kuo, Nathan Schuur, James Maclean, Michelle Beck, Holly Miller, Michael Republicano, Tim Dulaney, Trevor Tatum, Daniel Stemp, Juan Carlos Forero, Isaac Kuznits, and Guang Yang in the Division of Investment Management;
- Jessica Wachter, Alex Schiller, James McLoughlin, Dasha Safonova, Lauren Moore, and Charles Woodworth in the Division of Economic and Risk Analysis;
- Meridith Mitchell, Malou Huth, Natalie Shioji, Bob Bagnall, and Monica Lilly in the Office of the General Counsel;
- Song Brandon in the Division of Examinations; and
- Corey Schuster in the Division of Enforcement.
OASB and OIAD acknowledged that the Office of the Chair has the authority to direct the agency's rulemaking process; however, the opportunity to comment on 30-day and subsequent draft rules provides these offices with meaningful opportunities to carry out their office functions early in the process. Although OASB personnel raised concerns about the temporary change in the rulemaking process, they told us that they were nonetheless able to review, as warranted, all rule proposals likely to have a significant impact on small businesses and their investors. OIAD personnel informed us that, during the time the process change was in effect, they received two fatal flaw drafts (but not the corresponding 30-day drafts); they provided comments to the Commission on one of the proposed rules and determined that no comments were needed for the other. However, personnel reported to us that, had the change in the rulemaking process remained in effect, it would have significantly shortened the review and comment period and rendered OIAD's involvement in rulemaking largely ineffective because fatal flaw drafts are typically provided as a courtesy and only comments on perceived fatal errors are accepted at that stage. Generally, we concluded that changes to the SEC's rulemaking process, particularly without notice to the offices likely to be impacted, may unintentionally limit the ability of those offices to carry out their functions, and could hinder effective collaboration and information sharing across the agency.Notably, the SEC's strategic plan identifies the teamwork of the SEC's staff and its leaders, along with other elements, as the "foundation" of the agency, and acknowledges that "effective and efficient partnership of staff across the agency" is critical to the SEC's ability to carry out its mission. As reported in our October 2021 statement on the SEC's management and performance challenges, opportunities exist to strengthen communication and coordination across divisions and offices. Specifically, we stated, "management's early attention, as needed in response to this emerging theme can be instrumental to (1) prevent the development of systematic and significant challenges, such as potential siloing or duplicative functioning, in the future, (2) continue positive trends in employees views on collaboration, and (3) achieve the goals established in the SEC's most recent strategic plan." Furthermore, federal internal control standards state that effective information and communication are vital for an entity to achieve its objectives, and management should internally communicate the necessary quality information to enable personnel to perform key roles in achieving objectives.
We met with managers from the SEC's divisions of Trading and Markets, Investment Management, Corporation Finance, and Economic and Risk Analysis, some of whom raised concerns about increased risks and difficulties managing resources and other mission-related work because of the increase in the SEC's rulemaking activities. For example, some reported an overall increase in attrition (discussed further on page 21 of this document) and difficulties hiring individuals with rulemaking experience. In the interim, managers reported relying on detailees, in some cases with little or no experience in rulemaking. Others told us that they may have not received as much feedback during the rulemaking process, either as a result of shortened timelines during the drafting process or because of shortened public comment periods. Although no one we met with identified errors that had been made, some believed that the more aggressive agenda-particularly as it relates to high-profile rules that significantly impact external stakeholders-potentially (1) limits the time available for staff research and analysis, and (2) increases litigation risk. Finally, some managers noted that fewer resources have been available to complete other mission-related work, as rulemaking teams have borrowed staff from other organizational areas to assist with rulemaking activities.
Despite management's commitment to cross-functional collaboration and communication, personnel we met with (including those from the Division of Economic and Risk Analysis, the Division of Enforcement [Enforcement], and the Office of the General Counsel, among others) identified coordination and communication as a persistent challenge in the rulemaking process, particularly given potential overlaps in jurisdiction and differences in opinions. We reported on such challenges in a management letter issued in September 2022. . .
[T]he SEC seems to be facing challenges in its retention efforts. As the figures below demonstrate, the SEC has seen a significant increase in attrition over the last few years, from 3.8 percent in FY 2020 to an estimated 6.4 percent in FY 2022 (as of September 20, 2022) -- the highest attrition rate in 10 years. Most concerning is the increased attrition in Senior Officer and attorney positions, expected to be about 20.8 percent and about 8.4 percent for FY 2022, respectively.
See, for example: "SEC Announces Departure of Chief of Staff Prashant Yerramalli and Appointment of Amanda Fischer to the Role" (SEC Release / Nov. 7, 2022)
references a public Oct. 13 report posted on the SEC's website from the Office of the Inspector General, the SEC's own internal watchdog, detailing staff attrition and reports of discontent.Republicans want Gensler to explain how he will address the concerns in the report and also to allow more time for industry feedback on the new rules.
Putt's Law: Technology is dominated by two types of people: those who understand what they do not manage and those who manage what they do not understand.Putt's Corollary: Every technical hierarchy, in time, develops a competence inversion.
According to the 2020 Best Places to Work in the Federal Government rankings, which are compiled by the nonpartisan, nonprofit Partnership for Public Service, the SEC ranked fourth out of 25 mid-size agencies, just 1.5 points out of the third spot and less than four points away from the top of the rankings.The SEC's "engagement score" was 85.7, well above the government-wide average of 69.0."This honor is a testament to the SEC staff's teamwork, dedication, and service to American investors," said SEC Chair Gary Gensler. "They are the reason the SEC is one of the best places to work. I congratulate them on this achievement and thank them for their work on behalf of the public."The SEC finished first among all mid-size agencies in the category of "Work-Life Balance" that measures the extent to which employees consider their workloads reasonable and feasible, and managers support a balance between work and life.The SEC also had three divisions/offices rank among the top 10 in government for the "agency subcomponents" category, the most by any agency in government. The SEC's Office of Support Operations ranked fourth with a score of 91.3, and the Division of Investment Management and the Office of General Counsel ranked sixth and seventh, respectively.