Addressing an issue that is highly relevant to the Society’s SEC comment letter process, which has traditionally been member-driven (i.e., typically led by the Society's Securities Law Committee with significant drafting and review conducted by volunteers from the ~200 corporate, law firm, corporate governance advisor, and other insightful and seasoned members of that committee), Hester Peirce’s remarks last week: “Rat Farms and Rule Comments - Statement on Comment Period Lengths” explain why a 30-day comment period on an SEC rulemaking proposal usually is insufficient to obtain thorough, well-considered, and robust feedback of the type the SEC otherwise indicates it is seeking. This is particularly the case when multiple proposals are pending, and around certain time periods such as the holidays and fiscal year-end when prospective commenters and their staffs are likely to be largely unavailable. These abbreviated comment periods also fail to consider organizations’ comment letter processes and controls that often entail various levels of review and approval, including board-level review, and the subsequent evaluation and integration of that feedback before a comment letter is finalized.
As previously reported, the SEC’s proposed amendments to the proxy advisory rules adopted in 2020, which the Society supported and that reflected more than a decade’s worth of Society engagement on this issue, are tagged with a 30-day comment period that ends Monday, December 27. The proposed rule was released on November 17, about mid-way through the 30-day comment period associated with the SEC's clawback proposal, which raised numerous additional questions for public input that could significantly change the scope of the rule (see the Society’s comment letter here). Additional rule proposals, including amendments to Rule 10b5-1 and new disclosure regarding 10b5-1 trading arrangements and insider trading policies and procedures, are likely to be released this Wednesday, following the SEC’s scheduled open meeting.
Citing executive orders from 1993 and 2011, both of which indicate that 60 days is typically the minimal amount of time that should be afforded for meaningful public comment on agency rulemaking proposals, Peirce makes the case for a 60-day minimum rulemaking proposal comment period, and 90-day comment periods for more complex or multiple outstanding proposals.