It’s hard to know for sure whether astroturfing is part of the SEC comment letter process. Last fall, John wrote about the flurry of comment letters received at the SEC on the S-K Modernization Proposal and the potential that some would assert this resulted from an astroturf campaign. Broc wrote last fall about the “fishy” comment letters submitted to the SEC ahead of its proposed rulemaking on proxy advisors.
Congressional leaders are apparently taking the notion of astroturfing seriously, and a recent blog from Jim Hamilton summarizes a hearing held by the Subcommittee on Oversight and Investigations of the House Financial Services Committee on alleged astroturfing of the Administrative Procedure Act (APA) process for submitting comment letters on agency rulemaking – and as a reason for the hearing, the subcommittee cited reports of astroturfing relating to proposals by several agencies, one being the SEC.
Jim Hamilton’s blog provides an interesting read of the back and forth testimony about possible solutions to concerns about astroturfing. Here’s an excerpt:
Beth Simone Noveck, a professor from New York University, testified that the notice and comment period on proposed federal regulations is sometimes referred to as the “notice and spam” period due to the volume of duplicate comment letters agencies receive. She recommended that the agencies use readily available tools to address voluminous, duplicative and fake comments. These include machine learning to summarize voluminous comments, “de-duplication” software to remove identical comments and filtering software to sift out “the real and the relevant.”
Others, including Steven Balla, a professor from George Washington University and Ranking Member Barr, recommended Congress focus its attention on fake comment letters not mass comments.
Ranking Member Barr questioned whether the APA should be amended to standardize the comment letter collection process as it currently allows agencies discretion for determining how they collect and post comment letters. A GAO representative noted that a 2019 GAO study recommended certain agencies clearly disclose how they post comments and associated identity information, including the SEC, and the SEC has implemented these recommendations. The SEC issued a memorandum reflecting the SEC’s internal policies for posting duplicate comments and associated identity information and added a disclaimer on the SEC’s main comment posting page.
Possible solutions aside, it doesn’t sound like the Subcommittee settled on any immediate actions, and it’s unclear if there are any next steps.
-Lynn Jokela, TheCorporateCounsel.net February 21, 2020
