The Securities and Exchange Commission was busy in the first year of the Biden administration and 2022 also should be with Chairman Gary Gensler at the helm.
Notably, the SEC is working on a rule to beef up public company disclosures on human capital management and climate-related risk.
Democrats, including Mr. Gensler, will soon have a 3-1 majority on the five-member commission and have indicated a strong desire to require more prescriptive disclosure from public companies. Commissioner Elad L. Roisman, a Republican, announced on Dec. 20 that he will resign by the end of January.
The SEC in December unveiled a lengthy regulatory agenda that also notes staff is working on rule-making initiatives on proxy voting advice, special purpose acquisition companies, cybersecurity risk governance, cryptocurrency, corporate board diversity and a slew of other topics. At its final meeting of 2021 on Dec. 15, the commission approved issuing rule proposals on four topics: insider trading, stock buybacks, money market funds and security-based swaps. The comment periods for each proposal will conclude in early 2022.
The lone unanimous vote at the December meeting was to propose a rule enhancing disclosure requirements and requiring a cooling-off period for corporate insiders buying stock under Rule 10b5-1. The enhanced disclosure requirements would include an issuer to disclose in annual reports whether or not (and if not, why not) it has adopted insider trading policies and procedures, and a requirement for an issuer to disclose in quarterly reports the adoption and termination of Rule 10b5-1 trading plans and other trading arrangements by directors, officers and issuers, and the terms of such trading arrangements.
Commenters also have the chance to weigh in on a proposal that would increase liquidity requirements for money market funds in an effort to provide a more substantial liquidity buffer in the event of rapid redemptions.
At the December meeting, Mr. Roisman, who voted against proposing the money market fund rule, said the SEC is putting too many proposals out for comment simultaneously. "Unfortunately, I have very little confidence that we are allowing enough time to receive feedback from the many types of market participants whom these rules will affect," he said.
On crytpocurrency, Mr. Gensler has said that the SEC would benefit from additional regulatory authority over crypto trading and lending platforms. "I have asked SEC staff, working with our fellow regulators, to work along two tracks," Mr. Gensler said in written responses published in December to questions posed by Sen. Pat Toomey, R-Pa. "First, I have asked them how we can work with other regulators under our current authorities to best bring investor protection to these markets. Second, I've asked them what gaps we might need Congress's assistance to fill."
SEC Commissioner Hester M. Peirce, a Republican and cryptocurrency proponent, said in remarks before a December SEC Investor Advisory Committee meeting that the SEC has not "provided clarity in response to repeated questions on crypto from reputable players, but has instead embraced an approach that has been described aptly to me as 'strategic ambiguity.' Such an approach facilitates enforcement actions, but it is costly and treacherous for well-intentioned developers and their lawyers."