On September 15, 2022, SEC Chairman Gary Gensler gave his yearly testimony to the U.S. Senate Committee on Banking, Housing and Urban Affairs highlighting his priorities for the SEC. This year Mr. Gensler kept his testimony extremely short, allowing more time for questions and answers.
Last year, Chair Gensler gave lengthy testimony on his four key priorities: (i) market structure; (ii) predictive data analytics; (iii) issuers and issuer disclosure (including SPACs); and (iv) funds and investment management (see HERE).
This year Gensler again focused on market structure as a priority, noting that many aspects of the national market system rules have not been updated since 2005. Though not using the same topic subtitles as last year, SPACs, insider trading and investment funds remain top of list, as does crypto. Other priorities include shorting the settlement cycle to T+1, increasing central clearing in the treasury markets (rules were recently proposed), cybersecurity, and private funds.
Repeating his mantra, Chair Gensler again states that he believes that the vast majority of crypto tokens in the market are securities. As securities, the offer and sale of tokens must comply with the registration and exemption requirements in the federal securities laws as do trading platforms. Gary Gensler is territorial on the subject of crypto, asking Congress to be careful not to undermine the SEC’s jurisdiction over the subject in any future rulemaking.
Following his short speech, the floor was opened for questions during which the committee members grilled the SEC Chair related to his stance on crypto and push for climate risk related disclosures (a topic he did not raise). It is widely believed that the Democratic Gensler has launched an outright assault on the financial industry and capital markets, and the Republican members of the Senate Committee echoed that concern.
The majority of questions related to the SEC’s proposed climate disclosure rules. The proposed rules are enormous in scope, complexity, and ramifications and were the subject of my eight-part blog series. In the first blog in the series, I provided some background and an introduction to the rules – HERE. The second provided a high-level summary of the proposed rules including the phase in compliance schedule – HERE. The third blog in the series discussed the disclosures of climate-related risks – HERE. The fourth moved on to disclosures regarding climate-related impacts on strategy, business model and outlook – HERE. The fifth blog in the series delved into risk management and transition plan disclosures – HERE.
The sixth blog provided an overview of the extremely complex financial statement metrics requirements – HERE. The seventh blog in the series covered GHG emissions disclosures and Scope 1 and 2 attestations – HERE. Finally, Part 8 covered miscellaneous items including the disclosure of targets and goals and affected reporting companies and forms – HERE.
Many groups believe that the rules are overly onerous and exceed the SEC’s authority. Pat Toomey remarked that “the cost of compliance will be more material to the investor than the information itself” and warned that the SEC should be worried about legal challenges to the rules, especially in light of the conservative Supreme Court. Republicans were not the only concerned committee members; Jon Tester, a Democrat, raised questions about the potential impact on small business owners like farmers who could be ensnared by its requirement for public companies to disclose emissions in their supply chains.
Related to crypto, the committee was concerned about the SEC’s aggressive public comments while failing to provide meaningful guidance or regulatory clarity. The committee also raised questions about the new PCAOB Statement of Protocol with the China Securities Regulatory Commission and Ministry of Finance (see HERE.)
Securities attorney Laura Anthony and her experienced legal team provide ongoing corporate counsel to small and mid-size private companies, OTC and exchange traded public companies as well as private companies going public on the Nasdaq, NYSE American or over-the-counter market, such as the OTCQB and OTCQX. For more than two decades Anthony L.G., PLLC has served clients providing fast, personalized, cutting-edge legal service. The firm’s reputation and relationships provide invaluable resources to clients including introductions to investment bankers, broker-dealers, institutional investors and other strategic alliances. The firm’s focus includes, but is not limited to, compliance with the Securities Act of 1933 offer sale and registration requirements, including private placement transactions under Regulation D and Regulation S and PIPE Transactions, securities token offerings and initial coin offerings, Regulation A/A+ offerings, as well as registration statements on Forms S-1, S-3, S-8 and merger registrations on Form S-4; compliance with the Securities Exchange Act of 1934, including registration on Form 10, reporting on Forms 10-Q, 10-K and 8-K, and 14C Information and 14A Proxy Statements; all forms of going public transactions; mergers and acquisitions including both reverse mergers and forward mergers; applications to and compliance with the corporate governance requirements of securities exchanges including Nasdaq and NYSE American; general corporate; and general contract and business transactions. Ms. Anthony and her firm represent both target and acquiring companies in merger and acquisition transactions, including the preparation of transaction documents such as merger agreements, share exchange agreements, stock purchase agreements, asset purchase agreements and reorganization agreements. The ALG legal team assists Pubcos in complying with the requirements of federal and state securities laws and SROs such as FINRA for 15c2-11 applications, corporate name changes, reverse and forward splits and changes of domicile. Ms. Anthony is also the author of SecuritiesLawBlog.com, the small-cap and middle market’s top source for industry news, and the producer and host of LawCast.com, Corporate Finance in Focus. In addition to many other major metropolitan areas, the firm currently represents clients in New York, Los Angeles, Miami, Boca Raton, West Palm Beach, Atlanta, Phoenix, Scottsdale, Charlotte, Cincinnati, Cleveland, Washington, D.C., Denver, Tampa, Detroit and Dallas.
Ms. Anthony is a member of various professional organizations including the Crowdfunding Professional Association (CfPA), Palm Beach County Bar Association, the Florida Bar Association, the American Bar Association and the ABA committees on Federal Securities Regulations and Private Equity and Venture Capital. She is a supporter of several community charities including siting on the board of directors of the American Red Cross for Palm Beach and Martin Counties, and providing financial support to the Susan Komen Foundation, Opportunity, Inc., New Hope Charities, the Society of the Four Arts, the Norton Museum of Art, Palm Beach County Zoo Society, the Kravis Center for the Performing Arts and several others. She is also a financial and hands-on supporter of Palm Beach Day Academy, one of Palm Beach’s oldest and most respected educational institutions. She currently resides in Palm Beach with her husband and daughter.
Ms. Anthony is an honors graduate from Florida State University College of Law and has been practicing law since 1993.
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