Commissioner Uyeda Warns SEC Against Flawed Rulemaking Process

SEC Commissioner Mark T. Uyeda emphasized the need for the SEC to follow the standards of due process in creating rules, warning that procedural shortcuts will result in poor rulemaking and challenges under the Administrative Procedures Act.

In remarks before the Asian Pacific American Bar Association of the Greater Washington, D.C. Area, Mr. Uyeda focused on a proper notice and comment period as a key procedural requirement for any SEC rulemaking. He said this period must be sufficient to allow interested persons a "meaningful opportunity" to participate. He criticized the SEC for its 30-day comment period for many recent rule proposals, noting that comment periods were sometimes truncated when they included major holidays. Recent comment periods were further complicated by the fact that the SEC "issued multiple parallel proposals affecting the same stakeholders" at about the same time. "These factors raise the concern that such rule proposals [did] not afford interested persons a reasonable and meaningful opportunity to participate," said Mr. Uyeda.

Mr. Uyeda further criticized the SEC's rulemaking process for "taking shortcuts with respect to reviving long-dormant rule proposals," including a rule proposal that had been dormant for over seven years, as a result of which the cost-benefit analysis was outdated.

In personal terms, he pointed to the internment of U.S. citizens of Japanese ancestry - including his grandparents - to illustrate the harms that result from governmental failure of due process.

To address these concerns, Mr. Uyeda called for "[a]n unwavering and steady commitment to due process in all parts of government."