Specifically, the SEC is requesting data and other information from the public and interested parties about the benefits and costs of the current standards of conduct for broker-dealers and investment advisers when providing advice to retail customers, as well as alternative approaches to the standards of conduct.
While the SEC is particularly interested in receiving empirical and quantitative data and other information, all interested parties are encouraged to submit comments, including qualitative and descriptive analysis of the benefits and costs of potential approaches and guidance.
The SEC recognizes that retail investors are unlikely to have significant empirical and quantitative information, and welcomes any information they would like to provide. Commenters should only submit information that they wish to make publicly available.
uk defined benefit pensions consultation January 25, 2013Posted by Bradley in : consultation , add a comment
Concerned about the problems faced by employers with defined benefit pensions schemes which find they are required to make additional contributions to support their promises the UK government is asking for views about adjusting the requirements. The consultation document states (having noted that such pensions give their members “a much valued layer of financial security in later life”)
Some commentators have stated that rising deficits are forcing some employers to make substantial additional contributions to schemes, which is diverting funds away from business investment and ultimately, economic growth.
With respect to the relevant stakeholders, the document states:
Given the technical nature of pension valuations and the potential impacts of smoothing, feedback would be particularly welcome from trustees, sponsoring employers, actuaries and other pensions professionals. Members of the general public are also welcome to respond.
But given that what is going on here is deciding how much less secure the “defined” aspect of defined benefit pension schemes will be allowed to be in order to “promote economic growth,” this isn’t really a technical consultation at all. Elite decision-makers like to present financial consultations in this way to control outcomes. But what about basic fairness? Figuring out an appropriate balance between supporting the entitlement to a defined benefit and allowing businesses to operate without being damaged by pensions involves technical issues, for sure, but it also involves a more fundamental weighing of the different interests involved.
gao on agency rule-making January 23, 2013Posted by Bradley in : consultation , add a comment
In a report on federal rulemaking, Agencies Could Take Additional Steps to Respond to Public Comments, the GAO writes:
agencies requested comments on 77 of the 123 major rules issued without an NPRM in GAO’s sample. The agencies did not issue a follow-up rule or respond to comments on 26 of these 77 rules. This is a missed opportunity, because GAO found that when agencies did respond to public comments they often made changes to improve the rules. In addition, each of these 26 rules is economically significant and some of these rules have an impact of a billion dollars a year or more. These rules also cover important issues ranging from national health care policies to manufacturing incentive programs. For example, in one of the 26 rules, an agency defined a pre-existing condition to implement the Patient Protection and Affordable Care Act and sought public comment. The agency received 4,627 comments, but has not published a response to them. When agencies do not respond to comments requested, the public does not know whether the agency considered their comments, or if it intends to change the rule. As the courts have recognized, the opportunity to comment is meaningless unless the agency responds to significant points raised by the public.
sec investor advisory committee doesn’t really want the public to interfere with its work January 10, 2013Posted by Bradley in : consultation , add a comment
The Securities and Exchange Commission Investor Advisory Committee will hold a public meeting on Friday, January 18, 2013, in Multi-Purpose Room LL-006 at the Commission’s headquarters, 100 F Street, NE, Washington, DC 20549. The notice of the meeting invites “the public” to submit written statements and says:
The agenda for the meeting includes: introductory remarks from Chairman Walter and Commissioners; introductory remarks from Committee officers; discussion of administrative matters; and reports from the four Investor Advisory Committee subcommittees (the Investor as Owner subcommittee, the Investor as Purchaser subcommittee, the Investor Education subcommittee, and the Market Structure subcommittee).
The notice doesn’t give any hint of the content of the reports. The minutes of the committee’s June 2012 meeting, which are available on the SEC’s website don’t give any hints of the substance of the committee’s work. There don’t appear to be minutes of the meetings in September and October (or at least not on the SEC’s website) although it would be possible to wade through the webcasts and audio archive of the committee’s meetings. The committee did consider recommendations on the JOBS Act at its telephonic meeting on October 12th (after the October 5th deadline for comments on the SEC’s proposal (a number of other comments were in fact submitted after this deadline)). The committee’s JOBS Act recommendations and its procedures are criticised by Keith Paul Bishop here. The notice of the October meeting (dated October 9th (!)) invited public statements and said:
The agenda for the meeting includes discussion of and voting on a recommendation from the Investor as Purchaser subcommittee regarding the Jumpstart Our Business Startups Act (JOBS Act) requirements on general solicitation and general advertising in Rule 506 private placements.
But there seems to have been no advance notice of what the committee was thinking of doing, so no real possibility for public comment. The website shows that one public statement,from Keith Paul Bishop, was submitted in response to the notice of the October meeting. He objected to the lack of timely notice:
I strongly urge the Committee to reform its procedures to: (i) ensure that adequate advance notice is given to the public of all meetings (ii) make subcommittee recommendations available to the public sufficiently in advance of Committee meetings so that there is a meaningful opportunity for public comment and (iii) require disclosure of circumstances in which Committee members have potential or actual conflicts of interest or lack independence.
Another statement filed after the meeting contained similar objections:
It is very unclear what each of the Subcommittees is working on and whether there will be an opportunity for public input before individual recommendations are finalized. Except for a list of topics that was described in each of the Subcommittee reports at the September 28 meeting, the investing public is in the dark about what is going on in these Subcommittee discussions.
The committee does not seem to have paid much attention to these comments. The notice period for next week’s meeting is slightly longer than that for the October meeting, but there is still no information about what is to be discussed. And the notice of meeting is not mentioned in the latest news (or press releases) section of the SEC website, but on the what’s new page for January 9th. So, short notice, no information about what the committee proposes to discuss and no real attempt to let the “public” know that the meeting is even happening.
uk consultation policy : a critique January 10, 2013Posted by Bradley in : consultation , add a comment
The House of Lords’ Secondary Legislation Scrutiny Committee has published a rather critical report on the Government’s new approach to consultation (the written evidence is also published as well as a transcript of a committee session with Oliver Letwin). There’s lots of useful information in the report about the various groups which would like to and do participate in consultations and the difficulties they face in engaging with their members within the time frames set for consultations. For example, the “National Farmers’ Union (NFU) complained about consultations issued during the summer harvest period.” The Government announced a move away from a standard 12 week period for domestic consultations (which in any case was not a hard and fast period) while arguing for 12 weeks for EU consultations. It’s pretty striking to me that some of the more critical reactions seem to have come from business groups. For example:
The British Chambers of Commerce (BCC) said that the Department for Business (BIS) had launched a three-week consultation process about the implementation of the new employee-owner status, followed by an overlapping consultation on implementation of Nuttall Review recommendations, “which allowed 13 working days for stakeholders to consult their members and experts, conduct research, formulate their responses and achieve sign-off.”
Many of those who provided evidence to the Committee argued that there was insufficient transparency about consultations and that they were not well co-ordinated within and among government departments. The Committee recommends a website which would provide information about all open consultations. This could find a home on gov.uk (I don’t find this to be an attractive or as yet useful website but it is where they seem to be trying to centralise information about government in the UK). In addition, the Committee calls for an independent review to begin this month with findings to be published by Easter 2013 (end of March).
Update: the idea of a website which would list all open consultations is credited in the Committee’s report to Wendy Bradley (no relation) who writes an interesting blog at tintax.com. Here is a link to her post on the consultation consultation.
deferred prosecution agreements for the uk October 23, 2012Posted by Bradley in : consultation , add a comment
The UK Ministry of Justice announced that it would be introducing Deferred Prosecution Agreements in the UK. The announcement follows a consultation initiated in May 2012. The Government’s response to this consultation was published today. The Government’s response lists those who replied to the consultation but mostly characterizes the responses rather than identifying particular views with particular respondents. The responses (which are not available from the consultation page but some of which can be found online) raised some serious issues. Commenters raised questions about whether DPAs would tend to benefit larger commercial organizations rather than smaller firms which might be “softer targets” for criminal prosecutions (e.g. the Law Society’s response). Transparency International noted:
our concern that DPAs may be introduced primarily to provide an incentive to powerful companies who are not as resource constrained as prosecution agencies to settle cases at an earlier stage.
The Law Society pointed out that “the use of internal investigation material in subsequent investigations” would have human rights implications. The City of London Law Society Corporate Crime and Corruption Committee worried that the introduction of DPAs would prejudice junior employees. The Criminal Bar Association and Law Reform Committee of the General Council of the Bar of England and Wales suggested that there was insufficient evidence to determine whether DPAs were a good idea:
A proper review of the current regimes for dealing with economic crime should be conducted, addressing the different tools available to the prosecuting authorities and the degree to which they are working effectively. It is only then that the need for DPAs can be properly assessed and correctly structured to produce the best outcomes. Further, the use of DPAs in the United States also needs to be properly considered both with regard to its success in fighting serious financial crime and in bringing those responsible to justice.
Comments suggested that the consultation should have considered areas where regulators entered into negotiations with those subject to regulation. Jones Day wrote that the OFT’s experience with its leniency policy was relevant.
The Government reacted to the various responses in this way:
All told, we believe, and the consultation responses confirm, that the DPA model is a sensible and pragmatic means of identifying and penalising more corporate offenders. DPAs will help protect the public by tackling economic crime that currently too often goes without remedy.
But the comments that are readily available on line do not really seem to bear this out – they certainly do not establish conclusively that DPAs for the UK are the product of evidence-based policy-making. Moreover, the idea that transparency is identified as a critical component of the arrangements for DPAs in the context of a consultation which is not a model of transparency itself is a bit odd.
english-only consultations are maladministration in the eu October 18, 2012Posted by Bradley in : consultation , add a comment
I noted the other day that the Commission’s consultation on “the lists of product and service markets within the electronic communications sector susceptible to ex ante regulation” involved a questionnaire that was published only in English. The consultation was initiated only days after the Ombudsman decided that English-only consultations in the EU involved maladministration:
The Commission should ensure that all European citizens are able to understand its public consultations, which should, as a matter of principle, be published in all the official languages. Its failure to do so is an instance of maladministration.
The Ombudman wrote:
The Ombudsman agrees with the Commission that the publication of legislative proposals in all languages is necessary to enable citizens to exercise their “right to participate in the democratic life of the Union” (Article 10 (3) TEU). However, the Ombudsman cannot accept that such publication is sufficient to guarantee that right. On the contrary, it is at the preceding stage, that is, when the Commission’s mind has not yet been made up and its proposals have not yet been adopted as such, that citizens should be called upon to participate and to express their view(s) concerning future legislation and, in so doing, have an impact on decision making in the EU. EU law and the rights it grants to EU citizens are not meant to remain a dead letter. It is hard to imagine how citizens could actually enjoy a right guaranteed by the Treaty and have a direct say in the Union’s affairs, if they are only aware of the Commission’s position once it has been established and the formal legislative process has begun. This may be possible, to some extent, for well-resourced lobbying organisations representing specific interest groups, but not for the vast majority of ordinary citizens.
Will the Commission do what the Ombudsman says it should do? Or not?
eu consultation: only english-reading stakeholders need respond October 16, 2012Posted by Bradley in : consultation , add a comment
I have been thinking about stakeholder definition in consultations in the EU recently. I have been particularly interested in the ways that different groups within the Commission define the stakeholders they are concerned with in different ways. Thus consultations that seem to be technical consultations sometimes invite consumer responses whereas other similarly technical consultations do not. And sometimes there’s a stakeholder definition which says anyone can respond but we are really interested in contributions from the following people and entities (i.e. the ones whose responses we will really focus on). The public consultation on the revision of the Recommendation on relevant markets (2007/879/EC) (deadline for responses Jan. 8, 2013) defines the “target group” as follows:
The consultation is open to all citizens and organisations concerned with the market-based approach to regulation within the electronic communications sector in the EU.
Contributions are particularly sought from public authorities (including National Regulatory Authorities and National Competition Authorities), the Body of European Regulators in Electronic Communications (BEREC), Member States, the electronic communications industry, research institutions and universities, consumer advocacy groups and other interested parties.
The tacking on of the “other interested parties” seems to modify the exclusiveness of the description of the people from whom contributions are particularly sought. But does it really, or are these words designed to counter the sort of critique I made before the quote. In some ways this doesn’t matter very much as the people who want to comment on the issues will do so whether they feel they are in the defined target group or not. But perhaps the target group definiition has an impact on press coverage of consultations?
Anyway, the questionnaire is only being published in English. Given that the EU is supposed to be committed to multilingualism I don’t understand this, although this sort of thing happens more often than we might like to think. And it’s one way of limiting responses to those who may have technical expertise.
high level committee: publication of responses to first consultation, second consultation October 3, 2012Posted by Bradley in : consultation, financial regulation , add a comment
The responses to the first consultation carried out by the High-level Expert Group on reforming the structure of the EU banking sector are here. And there’s a new consultation based on the High Level Expert Group’s Report. Comments are due November 13th.
libor: commission consultation September 5, 2012Posted by Bradley in : consultation, financial regulation , add a comment
The Commission has published a consultation document on the regulation of “indices”, with comments due by November 15th. The “target group” for the consultation is “[c]ontributors to, providers of and users of indices and benchmarks.” The document suggests that recent proposed changes to the market manipulation regime may not be sufficient to address the problems the libor/euribor scandal identified:
changing the sanctioning regime alone may not be sufficient to improve the way in which benchmarks are produced and used. Sanctioning does not remove the risks of manipulation arising from the inherent conflicts of interest linked to the production and governance of benchmarks in their current form. This consultation seeks to assess how to improve the production and governance of benchmarks. Benchmarks should accurately reflect the economic realities that they are intended to measure and should be used appropriately.