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The Securities and Exchange Commission (SEC or Commission) has faced a number of challenges in the last few years. Judge Rakoff's decision in Citigroup, the Madoff scandal, and the Business Roundtable decision are just a few of the developments that have dealt lasting damage to the SEC's reputation. Critics have scrutinized the agency's decisionmaking on multiple fronts—from its enforcement policy to the quality of its rulemaking—and the SEC has largely come up short in the analysis. The once-revered top cop of the securities markets has taken a hit, and it is unclear whether it can recover. The Business Roundtable decision is of particular importance. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank) tasked the SEC with an unprecedented number of required rulemakings. Although the SEC has failed to complete many of these within the statutorily mandated time frames, the Jumpstart Our Business Startups Act (JOBS Act), signed by President Obama on April 5, 2012, requires additional SEC rulemaking in connection with its implementation. Commentators have observed that these rulemakings must withstand the rigorous scrutiny to which the D.C. Circuit subjected the SEC's proxy access rule. Indeed, the media reports that regulators are "paralyzed" by the threat of litigation. The SEC has also announced a number of changes to its rulemaking practices in response to the Business Roundtable decision. As a first step, it is necessary to evaluate the Business Roundtable decision more carefully. This Article examines the decision and the context in which it was decided in Part II. In Part III, this Article discusses the statutory obligations imposed on SEC rulemaking that the court applied in the Business Roundtable case—the Administrative Procedure Act (APA) and section 2(b) of the Securities Act of 1933. Part IV explores two critical structural constraints on SEC rulemaking—the noticeand- comment procedure imposed by the APA, as well as the Government in the Sunshine Act (the Sunshine ...

Corporate political activity has been the subject of federal regulation since 1907, and the restrictions on corporate campaign contributions and other political expenditures continue to increase. Most recently, Congress banned soft money donations in the Bipartisan Campaign Reform Act of 2002 ("BCRA"), a ban upheld by the Supreme Court in McConnell v. FEC. Significantly, although the omnibus BCRA clearly was not directed exclusively at corporations, the Supreme Court began its lengthy opinion in McConnell by referencing and endorsing the efforts of Elihu Root, more than a century ago, to prohibit corporate political contributions. Repeatedly, within the broad context of campaign finance regulation, corporate contributions have been singled out as particularly problematic. The federal regulatory scheme is based, in part, on the perception that corporations are able to use their substantial economic resources to influence public policy and thus distort the political process. At the same time, political activity is widely viewed as an illegitimate expenditure of corporate funds. Thus, again in the first few lines of the McConnell decision, the Court quoted President Theodore Roosevelt's statement that 'directors should not be permitted to use stockholders' money for political purposes." Similarly, the Court had previously characterized general corporate treasury funds spent on politics as being "diverted" from their proper use, indicating that political activity is not a legitimate business expenditure. Media reports about corporate corruption of the political process have fed these concerns. The press, for example, described Enron as buying legislative favors in exchange for political contributions. Studies claim that corporate donors use campaign contributions to purchase political influence.' The media often structures these reports of corporate and other special interest political expenditures to produce heightened impact. For example, the Wall Street Journal reported that 80% of the $314 million raised for the ...