In Change From Past, Pai, Other Commissioners Willing to Meet Wall Street

Other commissioners are also doing investor meetings, some more regularly than others, FCC officials said. Five years ago, such meetings had largely stopped, partially because of concerns about regulatory arbitrage (see 1502120010). The trend has reversed in recent years, officials said now. The agency didn't comment Tuesday.

Commissioner Mike “O’Rielly participates in meetings with analysts regularly and has done so for many years,” Chief of Staff Joel Miller told us. “He finds the questions raised to be incredibly helpful in understanding how the market views regulatory policy and what trends market participants are following within the industry. All conversations are limited to discussing only public information, and often serve to shed further light on agency processes, which helps to increase the transparency of the agency as well.”

Business ethics experts said the meetings can raise questions as they are often unannounced and the information presented doesn’t necessarily make its way into the record through ex parte filings.

“Meetings held behind closed doors aren't always improper, but they do pretty much always give the impression of impropriety,” said Chris MacDonald, associate professor at Ryerson University who studies ethics. “The public in general is skeptical of any sort of close relationship between business and regulators, and the secrecy of such meetings could serve to heighten that skepticism. Meetings behind closed doors should be limited, and there should be a publicly available rationale for them. This ethical standard is relevant, independent of whatever the FCC's own rules and past practices are. There may be exceptions, but those exceptions need justification.”

“The potential for at least the appearance of being inappropriate is obvious,” said Armand Musey, Summit Ridge Group founder. Pai will likely “keep his comments general and not delve into specific issues before the commission,” he said. Musey noted the development of the communications sector is “capital intensive" and the commission “likely realizes it’s important for investors to have confidence in the FCC.” Investors “would be foolish to give tens of billions [of dollars] to companies regulated by the FCC and to invest in spectrum without this confidence. These meetings are, likely in part to show that they are competent, thoughtful, and responsive to the issues surrounding the industry.”

Others said meetings between regulators and the financial sector aren’t a surprise.

“It is not unusual for regulators to meet with industry analysts privately,” said Mark Jamison, a University of Florida professor who helped the Trump administration organize the current FCC. “The meetings help the analysts better understand regulation so that they can make informed judgment,” he said. “Such meetings also serve to help the regulators understand the financial realities of the companies they regulate. Since the meetings are generally not related to a particular case before the regulatory commissions, having them in private would not typically violate administrative rules.”

“It’s unclear why FCC commissioners would not want to discuss industry dynamics with U.S. investors, who play an important role in funding the development of innovative new technologies by new and existing companies,” emailed LightShed’s Walter Piecyk. “It’s going to take investment to win the Race to 5G, so why keep investors out of the discussion?”

The speech is probably no big deal, said Recon Analytics’ Roger Entner: “Pai is taking the opportunity speak to investors regarding 5G and the upcoming auctions.”