Mark Chenoweth’s and Peggy Little’s “Secret Laws for the Powerful” (op-ed, July 24) focuses on regulation without notice-and-comment rule-making. Unfortunately, despite the Trump administration’s pronouncements to the contrary, this practice continues. The Securities and Exchange Commission’s Share Class Selection Disclosure Initiative is a headline-grabbing example in which 79 financial institutions were faulted for not taking in 2014-18 actions that weren’t articulated until 2018 through “gotcha” enforcement actions.

The SEC never cited a rule or regulation that had been violated. Even novice students of due process understand that guidance provided in 2018 cannot be used in cases citing actions taken before that time. In effect, the agency short-circuited the required rule-making process by adopting a regulation through enforcement rather than through rule-making.

Rather than continuing or expanding its enforcement initiative, the SEC, consistent with its regulatory mission and the Administrative Procedure Act, should halt the initiative.

Paul Atkins
Mr. Atkins was a SEC Commissioner 2002-08.

Originally posted in the Wall Street Journal on August 6, 2019