With Friends Like These: Rule-Making Comment Submissions to the Securities and Exchange Commission

Abstract

Structure and process theorists (McCubbins, Noll, and Weingast, among others), argue that the Administrative Procedures Act establishes a privileged position for the dominant organized interests of an industry in their dealings with regulatory agencies. We examined whether this was indeed the case with respect to the APA-required notice and comment period for rule making at the Securities and Exchange Commission (SEC). Based on an analysis of the commission's own statements regarding comment submissions in 1998, there is little to no evidence that interests that are more institutionally privileged are any more effective in changing the SEC's mind once the agency has proposed a rule.