Rulemaking in the Time of COVID-19
April 8, 2020
Good afternoon. I am proud to be part of today’s open meeting—the first that the Commission has held during this unique national crisis. First and foremost, I hope everyone is healthy and your families are well. I send my best wishes to all who are facing difficult situations that seemed unthinkable only weeks ago.
I would like to extend my thanks to Chairman Jay Clayton for his extraordinary leadership over the past few weeks as we have felt the effects of COVID-19. He has made clear that health and safety should be everyone’s primary concern, and I could not agree more. I also want to thank the heads of the SEC’s Divisions and Offices—particularly Brett Redfearn, Dalia Blass, Bill Hinman, Pete Driscoll, Rebecca Olsen, Jessica Kane, Stephanie Avakian, Steve Peiken, S.P. Kothari, Sagar Teotia, Raquel Fox, Bob Stebbins, and Lori Schock. Many of you have reallocated key personnel to continuously monitor market developments, kept the Commission fully informed of critical events and their potential effects, and prioritized the work of your teams pursuing time-sensitive matters intended to keep our markets functioning and investors apprised of critical new information. Finally, my thanks to the Office of the Secretary, the Office of Human Resources, and the Office of Information Technology, who have given us all the tools to telework, have facilitated our transition to using these tools full-time, and have enabled us to hold the Commission’s first virtual open meeting today.
To me, this meeting epitomizes this agency’s commitment to our mission: the SEC will not only protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation in good times—but also in unsettling and uncertain times. This meeting also epitomizes this agency’s resilience. While events of the past month have upended our daily lives, our staff has quickly adapted to the new circumstances and continued to carry out the work of this agency on behalf of investors and our markets.
Times like these show how important the work of this agency is. There have been requests that we refrain from pursuing regulatory actions besides those related to COVID-19. But I feel strongly that we must continue our work as long as we have the ability to do so. If circumstances change further, we can readjust by extending deadlines to gather more feedback or pushing back implementation dates, among other means. However, much time and thought has been given (and continues to be given) to developing our regulatory agenda. It implements our statutory mandates, and it is designed to prioritize regulatory actions that we believe will fulfill our mission in ways that further the interests of investors (retail and institutional), as well as many other market participants. Blanket inaction would do a disservice to these stakeholders as well as the commenters who took the time to share their views with us over the past several weeks and months.
Also, halting our day-to-day work and abandoning our agenda would do a disservice to our own staff. Each of our policy divisions has dedicated staff members who draft rulemaking recommendations for the Commission to carry out this agency’s 86-year-old mission. In recent weeks, to the extent that emergency action has been needed, these teams have dropped everything to help ensure that our markets continue to function and investors are protected. Many have worked around the clock on these new projects—all while acclimating to new work environments, and in some cases taking care of family members. As emergency projects have subsided, they have lost no time in moving forward with their normal workloads. As long as these staff members and their loved ones are healthy and safe, as long as we have the capability for them to carry on working—why would we prevent them from continuing to serve the public in these roles? Many SEC employees I have spoken to have found that in moments such as these, they are reminded of why they are proud to work at the SEC.
That being said, I recognize that the last few weeks have brought fast-paced changes to all our daily lives. Everyone I know has felt challenged in some way. In the midst of these challenges, it is important that we increase our efforts to work together. With respect to my work within this agency, I want the SEC staff to know that my team and I aim to be as supportive of your efforts as we can be. We commit to being responsive to your questions and delivering clear feedback on your recommendations quickly, so that you can manage your hectic schedules. While these are things I have always strived to do, in times like these, they are even more important.
On that note, I will turn to the recommendation before us to adopt rules that will modify the registration, communication, and offering processes for business development companies (“BDCs”) and other closed-end funds under the Securities Act of 1933. Congress directed this agency to promulgate rules that would allow BDCs and certain closed-end funds, including specifically interval funds, to use the securities offering rules and accommodations that are available to operating companies in our markets. The statutes containing these directives are self-executing, meaning that they will grant this relief to the targeted funds, even if this agency does not act.
I support the staff’s recommendation and commend our rulemaking team for implementing Congress’s mandates with such thoughtfulness and care. The team not only crafted rules to address Congress’s specific requirements, but made further changes to the offering rules applicable to BDCs and closed-end funds to make them more consistent with those that apply to operating companies. Also, throughout the rulemaking process, the team clearly heeded information provided by commenters. For example, this final recommendation departs from the proposing release by excluding certain proposed requirements that commenters warned would work against our objectives in practice. I thank the team for their great work and for bringing this recommendation to us in a timely manner. Particular thanks go to Sarah ten Siethoff, Brent Fields, Brian Johnson, Michael Spratt, Jay Krawitz, Amanda Wagner, David Marcinkus, Jacob Sandoval, Michael Kosoff, Asaf Barouk, Joel Cavanaugh, Terri Jordan, Amy Miller, Angela Mokodean, John Ganley, Christina Fettig, Ray Be, David Orlic, Jenson Wayne, Vladimir Ivanov, PJ Hamidi, Adam Large, Bob Stebbins, Meridith Mitchell, Lori Price, Natalie Shioji, Bob Bagnall, Luna Bloom, and Charles Kwon.
In closing, I want to reiterate my thanks to all of the SEC’s incredible staff. While I had many opportunities to notice your dedication and expertise during my first 18 months here, this past month has surpassed my expectations. It has always been a privilege to sit in my seat, but it is a privilege for which I am especially grateful right now.
 See, e.g., Chairman Jay Clayton, “Investors Remain Front of Mind at the SEC: Approach to Allocation of Resources, Oversight and Rulemaking; Implementation of Regulation Best Interest and Form CRS” (April 2, 2020), https://www.sec.gov/news/public-statement/statement-clayton-investors-rbi-form-crs.
 See, e.g., Letter to Federal Agencies Requesting a Stop to All Rulemaking (Mar. 24, 2020), https://bettermarkets.com/sites/default/files/Joint_Letter_Requesting_a_Stop_to_all_Rulemaking_During_this_Public_Health_Emergency.pdf (“As part of the executive branch response to the dangerous COVID-19 health emergency, the undersigned organizations respectfully urge federal agencies to place a moratorium on any pending, upcoming, or new regulatory rulemaking that is not directly responsive to the current COVID-19 pandemic, until at least 30 days after the national emergency has been lifted.”) Also, Commissioner Lee has stated: (1) “We should take action now to extend all comment periods by at least 60 days starting with those that closed in mid-March, just as this crisis was beginning to take its toll in the U.S., and continuing through all currently open periods” and (2) “The Commission should carefully analyze each action it takes in light of the altered economic and social landscape. Relevant considerations in that analysis include whether an action is directly responsive to COVID-19; whether an action represents an appropriate use of agency resources at a time when we are routinely called upon to take emergency actions; whether an action will unduly tax the already strained resources of investors, market participants, or the public; whether we can adequately assess the economic effect of an action in light of rapidly evolving economic conditions; and whether an action is otherwise critical to advancing the agency’s mission. None of these factors dictates a specific outcome, but rather each should be weighed carefully and balanced against the anticipated benefits of any action.” See Commissioner Allison H. Lee, “Regulatory Priorities and COVID-19” (April 3, 2020), https://www.sec.gov/news/public-statement/statement-lee-regulatory-priorities-covid-19-2020-04-03.
 See, e.g., Securities Offering Reform for Closed-End Investment Companies, Release No. 33-10763, at Section II.I.3 (describing the proposed Form 8-K reporting requirement for registered closed-end funds).