Yesterday, Broc Romanek wrote about the joint dissent issued by Commissioners Daniel M. Gallagher and Michael S. Piwowar with respect to the Commission’s recent adoption of Regulation SBSR which requires regulatory reporting of security-based swap information and the public dissemination of security-based swap transaction, volume, and pricing information by registered security-based swap data repositories.  But when exactly did the Commission adopt these new rules?  According to this press release, the Commission adopted Regulation SBSR at its meeting on January 14, 2015.  The adopting release, however is dated nearly a month later – February 11, 2015.  Why the delay?

According to the joint dissent, the staff lost a key comment letter that “covered a range of key issues in Regulation SBSR, and was submitted by an organization whose membership will be responsible for reporting nearly all security-based swaps subject to reporting under Regulation SBSR.”  When this oversight was discovered, the dissenting Commissioners asked that the misplaced comment letter be published and the comment period re-opened.  That didn’t happen.  The Commission instead s published the previously adopted release, modified to include references to the omitted comment letter.  Did that comport with the Administrative Procedure Act?

The APA requires the SEC to publish “notice” of “either the terms or substance of the proposed rule or a description of the subjects and issues involved,” in order to “give interested persons an opportunity to participate in the rule making through submission of written data, views, or arguments,” and then, “[a]fter consideration of the relevant matter presented, the agency shall incorporate in the rules adopted a concise general statement of their basis and purpose.” 5 U.S.C. § 553(b)-(c).  Here, the Commission’s action effectively denies interested persons the opportunity to react to comments that the Commission deemed important enough to reference in its adopting release.  See Am. Radio Relay League, Inc. v. FCC, 524 F.3d 227 (D.C. Cir. 2008).