An air of disagreement has appeared in the hallways of SEC offices as the regulatory agenda of Chairman Gary Gensler is being questioned by SEC’s two Republican commissioners. Both commissioners have released a statement where they question the agenda that is proposing the amendment of some recent rules.
On the 11th of June, Gensler official released the “Spring 2021 Unified Agenda and regulatory and Deregulatory Action”.
Elad Roisman and Hester Peirce are not in agreement with the agenda. In a joint statement, the Republican commissioners said about the proxy voting advice “was not an isolated event, but just the opening salvo in an effort to reverse course on a series of recently completed rulemakings.
They continued while “there are important and timely items on the list, including rules related to transfer agents and government securities alternative trading systems,”
The statement further said, “the agenda is missing some other important rule makings, including rules to provide clarity for digital assets, allow companies to compensate gig workers with equity, and revisit proxy plumbing,”
When it comes to major operations like the US Securities and Exchange Commission, adopting new rules often takes years and usually requires the companies to invest funds in training, compliance, and staffing.
However, the new agenda proposed by Gensler last Friday asks significant changes on: conflicted compensation, conflicts, whistler blower rules, the accredited investor definition, proxy updates, the harmonization rules, and resource extraction payments.
The commissioners exclaimed that the recent amendments are not only less than 1 year old, but they have only been in effect for maximum 7 months. They added that the agency hasn’t received any pivotal information which might’ve asked for these amendments or opening of any of such rules.
“We are disappointed that the commission would dedicate our scarce resources to rehashing newly completed rules”– Republican commissioners at SEC
This amendment speaks volumes for the new philosophy Gensler is trying to bring to the Commission. No new rules are safe from being amended if an amendment makes sense, which can put fear in the minds of companies.
Elad Roisman and Hester Peirce can vote “no” on new rules and amendments but with a Democrat majority, chances are the amendments will be approved.
The following priorities have been made clear by Gensler:
- More shareholder democracy.
- SPACs (Special purpose acquisition companies).
- Private fund rules, money market fund rules, ESG fund rules, and investment fund rules.
- Enhanced transparency surrounding securities-based swaps ownership, short-sale disclosure, stock buybacks, and finally the stock loan market.
- Climate risk, workforce diversity, corporate board diversity, cybersecurity risk, and human capital related disclosures.
The GOP commissioners said that historically SEC has put aside political differences and followed an rigorous & unbiased rulemaking process to preserve the sound policies and operate in a “predictable regulatory regime”.
For now both commissioners are hoping Gensler will rethink the amendments and focus more on small business capital formation and elder investor fraud.