Influence Analytics: What interests public most at SEC, CFTC? More data disclosure

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Proposals to improve public disclosure of corporate and government accountability data — from corporations’ political contributions to the payments they make to foreign governments for mineral rights — attracted the most interest from members of the public, a Sunlight Foundation analysis of 10 years of public comments to two key federal financial agencies shows. Most of these comments were form letters organized by advocacy groups and unions.

The findings draw on regulatory data published by the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) — data that up until now has been hard to access and analyze. That’s because the SEC and CFTC are independent agencies. Unlike those of executive branch, they do not make their regulatory data available on, the source of data for Sunlight’s Docket Wrench tool. Through Docket Wrench, Sunlight helps the public see what happens to laws after they pass Congress, when the government agencies write (and rewrite) the rules and regulations to implement them. Often the same organizations that are lobbying Congress on legislation turn around and do the same with agencies after the fact. The information in contained in regulatory dockets can help illuminate these patterns of influence.

With the help of a grant supported by Transparency International, and in partnership with the Thomson Reuters Foundation, Sunlight was able to integrate SEC and CFTC regulatory data into Docket Wrench. Now, the public can not only access regulatory proposals and public comments, but also see when comments form clusters of similar language, indicating they are part of a letter-writing campaign.

Like the snake that swallowed the elephant, the two financial agencies saw a huge increase in their regulatory work in the years immediately following the passage of the Dodd-Frank financial reform law, Sunlight’s analysis shows. On average, the SEC and the CFTC proposed more than twice as many rules per year since the passage of the law compared to the five years leading up to it. The number of public comments they have received on these rules has also ballooned, from an average of 39,249 in the five years before passage to 185,697 afterwards, five times as much.

Docket Comments received
2011 corporate campaign disclosure docket: Comments on Rulemaking Petition: Petition to require public companies to disclose to shareholders the use of corporate resources for political activities 1,161,875
2010 oil, gas & mining payment disclosure docket: Comments on Proposed Rule: Disclosure of Payments by Resource Extraction Issuers 149,529
2013 executive pay docket: Comments on Pay Ratio Disclosure 128,297
2010 executive pay docket: Executive Compensation: Title IX Provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act 107,635
2011 executive pay docket: Comments on Proposed Rule: Prohibitions and Restrictions on Proprietary Trading and Certain Interests in, and Relationships With, Hedge Funds and Private Equity Funds 65,713
2010 oil, gas & mining payment disclosure docket: Proposed Rule: Conflict Minerals 39,928
2006 executive pay docket: Comments on Proposed Rule: Executive Compensation and Related Party Disclosure 29,659
2007 shareholder proposals docket: Comments on Proposed Rule: Shareholder Proposals 26,331
2003 security holder director nominations docket: Comments on Proposed Rule: Security Holder Director Nominations 18,257
2014 whistleblowers docket: Comments on Rulemaking Petition: Request for rulemaking petition to clarify and strengthen protections for whistleblowers, requesting the Commission hold hearings and create an Advisory Committee on Whistleblower Reporting and Protection 15,318
Top SEC dockets by comments received

However, the issue that attracted the most public comments by far — 1.2 million — was not a Dodd-Frank-related regulation but rather a citizens petition in reaction to Citizens United, the 2010 Supreme Court decision that set the stage for unlimited corporate contributions to political campaigns. In 2011, a group of law professors filed the petition asking the SEC to develop requirements that corporations disclose their political spending to shareholders and the public. “Disclosure of corporate political spending is necessary not only because shareholders are interested in receiving such information, but also because such information is necessary for corporate accountability and oversight mechanisms to work,” read the petition, which is headed by Lucian A. Bebchuk of Harvard Law School and Robert J. Jackson, Jr. of Columbia Law School.

The petition went on to say that in Citizens United v. FEC, the Supreme Court cited examples of shareholders holding their corporations accountable for its political speech. “For this mechanism to work, however, shareholders must have information about the company’s political speech.” That 2011 petition went on to garner more than 700,000 comments, and the SEC placed the issue on its 2013 regulatory agenda, the list that informs the agency’s regulatory plans; however, the agency never acted on the proposal. In April 2014, Citizens for Responsibility and Ethics in Washington updated and renewed the petition. As of this publication, the docket for the two petitions had attracted 1.2 million comments.

Many of these came from letter-writing campaigns organized by groups advocating corporate disclosure of contributions. Unlike the CFTC, the SEC does its own analysis of common language in regulatory comments and posts the results on its website. The agency’s analysis shows that the biggest clusters of letters were in favor of the petition. For example, this cluster of more than 380,000 letters urges the agency to issue a rule requiring publicly traded corporations to publicly disclose all their political spending. The language is identical to alerts sent out by advocacy groups in favor of disclosure, such as Common Cause and AFSCME, a labor union. Another cluster of more than 95,000 letters follows language from this alert by Public Citizen, urging the SEC to put the corporate disclosure of political contributions back on its agenda.

The issue of disclosure of payments by oil, gas, mining and other resource extractor industries to foreign governments also attracted a significant level of public attention, with 149,529 comments. (Another 39,928 comments on the subject were collected via a different docket.) The biggest cluster of letters by far, more than 149,000, grew out of by this letter-writing campaign by the advocacy group One, which works to end poverty and disease in Africa: “Please do not give into industry pressures … and make sure that ALL companies are covered, every country and every project gets reported, and loopholes that would allow large sums of money to go unreported are closed.”

The regulation in question was mandated by section 1504 of the Dodd-Frank financial reform act, and requires the SEC to issue regulations requiring the oil, gas and mining industries to publicly report how much they pay foreign governments. While anti-poverty groups hailed this requirement, industry opposed; a report from the Thomson Reuters Foundation showed that ExxonMobil and Shell executives met with SEC officials four times to discuss the issue. The two companies, along with the American Petroleum Institute and the U.S. Chamber of Commerce, later filed a lawsuit against the final regulations. Meanwhile, the European Union, Canada and Norway have already taken steps forward with requiring disclosure of such payments. In September, Oxfam filed a lawsuit in U.S. District Court to force the SEC to issue a new version of the regulations.

Another magnet for public comments: the issue of executive pay. Several dockets concerning the issue received more than 300,000 comments combined. The proposals in question also grow from Dodd-Frank provisions, including this one mandating that certain companies must disclose the ratio of how much employees are paid versus the CEO. The biggest cluster, more than 71,000, flowed in following this alert by the organization SumofUs, a consumer advocacy group whose top leadership includes former employees of the AFL-CIO. The agency has not finalized this regulation; meanwhile, there is a proposal in Congress to repeal it.

Docket Comments received
2010 position limits docket: Comments for Proposed Rule 76 FR 4752 14,179
2010 off-exchange retail foreign exchange docket: Comments for Proposed Rule 75 FR 3281 9,017
2010 position limits docket: Comments for Proposed Rule 75 FR 4143 8,395
2010 Sunshine Act meeting* docket: Comments for Sunshine Act Sunshine Act Meeting: March 25, 2010 2,850
2010 end-user exemption/swaps docket: Comments for Proposed Rule 75 FR 80747 1,525
2010 position limits docket: Comments for Proposed Rule 75 FR 67258 1,166
2006 trades reporting program docket: Comprehensive Review of the Commitments of Traders Reporting Program 1,083
2010 swap definitions docket: Comments for Proposed Rule 75 FR 80174 1,062
2010 derivatives docket: Comments for Proposed Rule 75 FR 63732 1,039
2010 swap definitions docket: Comments for Proposed Rule 75 FR 51429 964
Top CFTC dockets by comments received

Overall, the CFTC did not attract the massive letter-writing campaigns that the SEC did; this is likely largely due to the more arcane nature of futures regulation. The proposal that did receive the most comments, however, was also a Dodd-Frank mandated provision, this one on position limits, with more than 14,000 comments. The law requires limits on how many futures contracts an investor is allowed to hold in certain commodities. As Sunlight reported in 2011, a handful of groups — including some backed by petroleum marketing firms, airlines and unions — were responsible for the great majority of the comments. The biggest cluster, of more than 6,000, came from a form letter distributed by a group backed by the airline and petroleum industries. While the CFTC issued final rules, a U.S. District Court judge struck them down in October 2012 in response to a lawsuit by two powerful Wall Street trade associations, the Securities Industry and Financial Markets Association (SIFMA) and the International Swaps and Derivatives Association.

The dockets cited above should not be interpreted as a sign of intense public scrutiny of either of these two agencies. Proposals that generate large numbers of public comments are very much the exception to the rule. The great majority of proposed rules by the SEC and the CFTC attract few responses: More than half of proposed rules that received comments at the two agencies — 53 percent — received 25 comments or fewer.