Better Markets has called on the SEC to reopen the public comment period on its proposal to reduce reporting requirements for public companies from quarterly to semiannual disclosures, arguing that an error in the consultation notice may have prevented some stakeholders from submitting comments.
The non-profit organization says the SEC's notice of proposed rulemaking in the Federal Register directed commenters to submit feedback to '[email protected]' instead of '[email protected]', which it says is the correct address.
Responding to Governance Intelligence, an SEC spokesperson rejected the claim that the issue affected comment submissions.
'Both email addresses are valid and accepted methods to submit public comments on this proposal. A large number of comments have been received and we are working on posting them. We encourage the public to continue checking SEC.gov and note that submissions are not necessarily posted in the order of receipt.'
In a letter to the SEC, Better Markets requested that the commission correct the Federal Register notice, reopen the comment period for at least 60 days and issue a public statement advising anyone who attempted to submit comments to verify whether their submissions were received.
The organization also said the SEC should publish all comments received before reopening the consultation so commenters can determine whether their submissions were successfully filed.
Dennis Kelleher, co-founder, president and chief executive officer of Better Markets, says reopening the consultation is necessary to protect the integrity of the rulemaking process.
'The SEC's notice of proposed rulemaking in the Federal Register to reduce financial reporting to investors from quarterly to semiannually had an incorrect email address for the public to submit comments,' he notes.
'While many have commented on this proposed rollback of critical disclosures, there can be little doubt that some comments from the public were submitted to the incorrect email and therefore not received by the SEC.'
Kelleher adds that failing to address the issue could leave any final rule 'irredeemably infirm under the Administrative Procedure Act (APA) and vulnerable to legal action.'
Better Markets also points to a similar issue in 2022, when the SEC reopened comment periods for 11 rule proposals after discovering problems with its comment submission system. The organization notes that commissioners Mark Uyeda and Hester Peirce supported that decision and argued the commission should take the same approach now.
The reporting schedule proposal has attracted significant public attention. Better Markets says more than 200,000 comment letters have been submitted to the SEC, with 99 percent opposing the proposal to replace quarterly reporting with semiannual reporting.
One such example is the letter submitted by shareholder advocacy group As You Sow, which says the proposed reporting change ‘would reduce transparency, increase information asymmetry, impair shareholder engagement and shift significant costs from issuers to investors without demonstrating corresponding benefits to investors or the capital markets.’
A Better Markets spokesperson told Governance Intelligence the organization remains unconvinced by the SEC's explanation, pointing to comments on a LinkedIn post cited in its letter that described difficulties submitting responses. According to the spokesperson, those included long-time commenters on SEC proposals and the Ohio state securities regulator.
The spokesperson also says Better Markets reviewed SEC comment filing instructions dating back to 2019, with spot checks to 2017, and found this was the only instance where the agency used what it considers to be the incorrect email address, apart from one recent proposal where the Federal Register and the SEC website listed different addresses. The spokesperson adds that the SEC's webpage explaining how to comment on proposals also uses what Better Markets views as the correct email address.
'Altogether, and particularly with the comments on that LinkedIn post, we thought it was odd, considering this is not an email address they've listed for about eight years, [and] that it warranted asking them about it.'
The spokesperson adds that Better Markets believes the SEC should follow the approach it took after a similar issue in 2022 by reopening the comment file and giving stakeholders another opportunity to submit comments.
'We think that would be a fair outcome and would allow everyone the opportunity to comment.'
If the SEC declines to do so, the spokesperson said it should 'release a public statement explaining why they suddenly had a new email address and be able to substantiate that comments submitted there were actually received.'
The spokesperson also questions why significantly fewer than 200,000 comments currently appear on the SEC's website despite reports that more than 200,000 submissions have been made.
'There certainly aren't anywhere near 200,000 comments on the website. So, the question becomes: are you simply slow at posting them, or did some get lost in the process?'
The spokesperson adds: 'We think greater transparency and more care in explaining what happened would be warranted, given the totality of the evidence.'
Natalie Bannerman
Natalie is a former telecoms and infrastructure journalist, a role she held for nearly seven years. Before this, she worked in the B2C startup space, covering lifestyle, arts and culture reporting. As senior reporter for Governance Intelligence she...
