Last month, I wrote that the SEC's about face in responding to the no-action letter request of Whole Foods Market, Inc. "clearly wasn’t the SEC’s finest hour." See SEC’s Rule 14a-8 Volte-Face Is Pointlessly Outré But It Does Have Real World Ramifications. Several days later, a coalition of some 17 different organizations delivered a much less measured assessment of the SEC's action.
In this letter to Chairman Mary Jo White, the coalition denounced the SEC's "abrupt" change of course "at the height of the shareholder proposal season on the eve of a three day holiday weekend". In particular, the coalition decried the "opaque process by which this sudden shift in policy was decided and communicated".
There is no doubt, moreover, that the coalition's criticism was aimed directly at the Chairman White:
More troubling still, it also appears that this fundamental change in policy was made without any apparent consideration by, or formal vote of, the other four SEC commissioners. The announcement was simply a pair of statements by the Chair and the Division, not as action by the full Commission. We believe policy changes of this magnitude should only be made in a formal action by the full Commission.
This isn't the only recent case of unilateralism. Just last month, the adopting release for a new rule was rewritten after a Commission meeting approving the rule. See Did The SEC Violate The Administrative Procedure Act? Also last month, it appears that the Chairman initiated a broad and burdensome informal inquiry perhaps in response to pressure from some members of Congress. See Is Anything Fishy With The SEC’s Whistleblower Inquiries?
The letter was signed by the following groups:
American Bankers Association
American Insurance Association
American Petroleum Institute
Association for Corporate Growth
Center On Executive Compensation
Financial Services Roundtable
Independent Community Bankers of America
The Latino Coalition
National Association of Convenience Stores
National Association of Corporate Directors
National Association of Manufacturers
National Black Chamber of Commerce
Retail Industry Leaders Association
Securities Industry and Financial Markets Association
Society of Corporate Secretaries and Governance Professionals
U.S. Chamber of Commerce