October 19, 2022

SEC Reopening Comment Period on Several Key Proposed Rules After Technical Error

Holland & Knight SECond Opinions Blog
Jessica B. Magee
Gavel and scale resting on desk

The SEC on Oct. 7, 2022, reopened the comment period for 11 rule making proposals, one request for comment and eight Self-Regulatory Organization (SRO) matters – all due to a technical error. This glitch likely throws a wrench in the SEC's push to speed up the rulemaking process.

In August 2022, commenters noticed their submissions – made through the SEC's website – were not posted on the proposed rule's page. After market participants informed SEC staff of the issue, the SEC discovered the problem: When comment letters were submitted on the website as an attachment, the letter attachment was not sent to the Office of the Secretary, where the comment letters are processed. Although the SEC insists the glitch mainly impacted comments submitted in August 2022, the error was found to have occurred as early as June 2021. The SEC estimates almost 200 comment letters were lost due to the technical error, a small fraction of the more than 25,000 unique comment letters and more than 45,000 form comment letters the agency received during the relevant time period.

The 12 affected releases are listed below, along with helpful insights from Holland & Knight's Securities Enforcement Defense Team on key proposals:

Although the SEC has recovered almost 90 percent of the affected comments, the agency is reopening the comment period to ensure interested persons have an opportunity to participate in the rulemaking process. The comment period will be open for 14 days following publication of the reopening release in the Federal Register.

Additionally, the SEC reports that the glitch may have affected the following self-regulatory organization matters:

  • File No. SR-BOX-2022-08, BOX Exchange LLC; Proposed Rule Change, as Modified by Amendment No. 1, to Amend Rule 12140 (Imposition of Fines for Minor Rule Violations), to Expand the List of Violations Eligible for Disposition Under the Exchange's Minor Rule Violation Plan and to Update the Fine Schedule Applicable to Minor Violations of Certain Rules, July 7, 2022
  • File No. SR-CboeBZX-2021-083, Cboe BZX Exchange Inc.; Proposed Rule Change to Amend Rule 25.3, Which Governs the Exchange's Minor Rule Violation Plan, in Connection with Certain Minor Rule Violations and Applicable Fines, Dec. 20, 2021
  • File No. SR-FINRA-2022-017, Financial Industry Regulatory Authority Inc.; Proposed Rule Change to Amend FINRA Rule 6750 Regarding the Publication of Aggregated Transaction Information on U.S. Treasury Securities, Aug. 5, 2022
  • File No. SR-FINRA-2022-024, Financial Industry Regulatory Authority Inc.; Proposed Rule Change to Amend the Codes of Arbitration Procedure to Modify the Current Process Relating to the Expungement of Customer Dispute Information, Aug. 9, 2022
  • File No. SR-MEMX-2021-10, MEMX LLC; Proposed Rule Change, as Modified by Amendment No. 1, to Establish a Retail Midpoint Liquidity Program, May 6, 2022
  • File No. SR-NYSEARCA-2022-52, NYSE Arca Inc.; Proposed Rule Change to Amend Rule 6.64P-O, August 15, 2022
  • File No. SR-NYSENAT-2021-19, NYSE National Inc.; Proposed Rule Change to Extend the Pilot Related to the Market-Wide Circuit Breaker in Rule 7.12, Oct. 1, 2021
  • File No. SR-OCC-2022-802, The Options Clearing Corporation; Advance Notice Related to a Master Repurchase Agreement as Part of The Options Clearing Corporation's Overall Liquidity Plan, July 20, 2022

Accordingly, the SEC will also evaluate resubmitted comments for these SROs.
The SECond Opinions Blog will continue to monitor the agency's activity in this space and provide further updates. If you need any additional information on this topic – or anything related to SEC enforcement – please contact the authors or another member of Holland & Knight's Securities Enforcement Defense Team.

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