The SEC revolving door and comment letters

• Main Authors: SHEN, Michael, TAN, Samuel T.
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2023
• Subjects: SEC comment letters; external counsel; revolving door; regulatory capture; Securities and Exchange Commission employees; influence; lawyers; Accounting; Accounting Law; Legal Ethics and Professional Responsibility
• Online Access: https://ink.library.smu.edu.sg/soa_research/2015; https://ink.library.smu.edu.sg/context/soa_research/article/3042/viewcontent/SEC_Revolving_Door_av.pdf
• Institution: Singapore Management University

Government officials, advocacy groups, and the business press have raised concerns that former SEC employees may continue to influence the SEC after leaving the agency. Using hand-collected data on the characteristics of 1,384 lawyers who represented firms in responding to SEC comment letters between 2005 and 2016, we examine the impact of post-revolving SEC employees on the SEC comment letter process. Among other determinants, we find that older and larger firms with a history of litigation are more likely to hire former SEC lawyers over non-SEC lawyers. Relative to firms that involve only non-SEC lawyers, we find that firms that involve former SEC lawyers in responding to SEC comment letters negotiate to a greater extent with the SEC, and have a lower likelihood and number of amendment filings, after matching on lawyer, law firm, comment letter, and firm characteristics.