Individual Lawyers, the SEC Revolving Door, and Comment Letters

62 Pages Posted: 9 Jan 2018 Last revised: 20 Feb 2019

See all articles by Michael Shen

Michael Shen

National University of Singapore - Department of Accounting

Samuel T. Tan

Singapore Management University

Date Written: February 8, 2019

Abstract

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 a hand-collected database of individual lawyers that represent firms in responding to SEC comment letters, we examine the impact of former SEC lawyers on the comment letter process. We document significant differences between individual lawyers in their clients’ outcomes following the receipt of a comment letter, and find that firms that retain former SEC lawyers are larger, older, more profitable, and more likely to have received a comment letter raising accounting issues. After matching on lawyer and law firm characteristics, comment letter complexity and issues, and firm characteristics, we find evidence consistent with former SEC lawyers increasing resistance in the comment letter process: conversations involving former SEC lawyers involve more negotiation, are more likely to discuss revising future filings, and result in fewer amendments to prior periodic filings.

Keywords: SEC comment letters, external counsel, revolving door, regulatory capture

JEL Classification: G18, K22, M41, M48

Suggested Citation

Shen, Michael and Tan, Samuel T., Individual Lawyers, the SEC Revolving Door, and Comment Letters (February 8, 2019). Available at SSRN: https://ssrn.com/abstract=3096855 or http://dx.doi.org/10.2139/ssrn.3096855

Michael Shen

National University of Singapore - Department of Accounting ( email )

Biz 1, #07-09
15 Kent Ridge Drive
Singapore, Singapore 119245
Singapore

Samuel T. Tan (Contact Author)

Singapore Management University ( email )

60 Stamford Road
Singapore 178900
Singapore

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