Small Energy Coalition Powers Large Reform

A Houston-based oil and gas operations company learned of a little-known provision in the new Dodd-Frank law that would require them to file with the Securities and Exchange Commission (SEC) as “fund advisers,” based on how they raised capital. As is often the case with large reform bills, this company was unaware of the problem until after the 2,300-page bill was signed into law.

PSW was brought in to run a small coalition of the half-dozen energy companies that would be subject to the new “fund adviser” criteria. We created Congressional targets, focusing primarily on Senate Banking and House Financial Services committee members. Through old-fashioned shoe-leather lobbying, we were able to cultivate support on Capitol Hill, leading to unanimous approval by the Financial Services Committee of legislation to address the problem. In the end, however, the political headwinds were too stiff and lawmakers were unwilling to re-open the debate over the Dodd-Frank law.

With a legislative fix no longer an option, we shifted our focus to the SEC. To lay the groundwork, we enlisted key members of the Financial Services Committee to write the SEC in support of regulatory relief. We then engaged directly with the SEC Commissioners, bolstered by the drumbeat we had created on Capitol Hill and PSW’s decades-long relationships at the SEC. Fortunately, we had a strong policy argument, and one of the Commissioners took the lead on making our case with fellow Commissioners.

Without a lot of fanfare, the SEC granted an exclusion for our coalition members from having to register as fund advisers, saving each of those companies hundreds of thousands of dollars in compliance costs. To date, this is still one of the few fixes that the SEC granted in its implementation of Dodd-Frank.