Activist Group Calls For an Investigation Into Fishy SEC Comment Letters
This article first appeared on Bloomberg on December 6, 2019.
A Democratic watchdog group is calling for an investigation of suspicious letters submitted to the Securities and Exchange Commission in support of a rule change sought by large corporations.
The American Democracy Legal Fund, based in Washington, sent a letter Thursday asking the SEC’s inspector general and the Justice Department to examine the role of the 60 Plus Association, a Virginia advocacy group, in generating the letters. When SEC Chairman Jay Clayton announced proposed changes to shareholder-voting rules last month, he cited seven letters supposedly written by ordinary Americans.
The ADLF letter refers to a Nov. 19 Bloomberg News article revealing that some of the people whose names appeared on the comment letters, and others sent to the SEC, were friends, relatives or business associates of 60 Plus staff. Some said they weren’t aware a letter had been sent in their name or weren’t familiar with the issue.
Saul Anuzis, president of 60 Plus, said that although his group helped draft and submit letters, all of the people whose names were used gave permission, “and they will be willing to sign an affidavit to testify as such.” He said some people who told Bloomberg News that they didn’t know about their letters may have forgotten. The SEC didn’t respond to requests for comment.
Although it’s common for advocacy groups to stuff agency mailboxes with letters, “what makes 60 Plus’s efforts uniquely troubling is how clear an effect they had on the proceedings,” ADLF President Brad Woodhouse wrote. “If 60 Plus’s conduct goes uninvestigated, it will invite other organizations to pursue the same misleading and obstructive strategy.”
The ADLF, founded by Democratic activist David Brock, frequently files ethics and campaign-finance complaints against Republicans. 60 Plus describes itself as a conservative alternative to the senior-citizen group AARP. It often advocates for issues that align with those of corporate donors.
The SEC’s proposal would make it more difficult for small investors to propose resolutions at corporations’ annual meetings. It would also impose new restrictions on proxy-advisory firms, potentially discouraging them from recommendations that conflict with corporate management.