Besides the legitimate question of whether the SEC has the authority to impose these disclosure obligations, and the hurdle crystallized in the Supreme Court’s West Virginia v. EPA ruling, Gensler steadfastly refuses to consider the evidence that these disclosure obligations risk burdening companies and their shareholders with high regulatory costs while providing little information of value for investors. As Senator Bill Haggerty (R., Tenn.) pointed out, such new regulatory requirements add to the “already crippling cost” of being a public company. This regulation would act as a powerful disincentive to going public, which will decrease the number of companies available to investors. At least there’s still hope that the SEC’s review of the more-than-14,000 comment letters it received will result in a reconsideration of these onerous disclosure rules.
The SEC, under Gensler’s leadership, should heed the increasingly louder calls (including those coming from the White House) for much-needed clarity on crypto regulation, and it should revisit proposed climate-risk disclosures to ensure that investors do not lose out on unrealized opportunities stifled by unclear or burdensome regulation. Consistency is often an admirable quality in a regulator, but the consistent failure to consider new evidence is not.
‘Enforcement 40’ for 2020
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