In recent months, the SEC has released a series of proposed rules relating to several different topics, including most significantly its March 2022 release of proposed rules regarding climate change and greenhouse gas emissions disclosure. These various proposed rules are still in the public comment period and it remains to be seen whether the various proposed rules will be adopted and if so in what form. Even assuming some forms of the proposed rules are adopted, the rules almost certainly will be subject to court challenge by business groups and other constituencies. As a result of the U.S. Supreme Court’s landmark decision in the last days of June in the carbon emissions rulemaking case, groups challenging the SEC’s rules have a potentially potent new tool to use to try to block the rules.
Continue Reading Will the “Major Questions Principle” Block the SEC’s Proposed Climate Change Disclosure Rules?

On May 18, 2022, the Fifth Circuit held in Jarkesy v. SEC (here), that the agency’s use its in-house Administrative Law Judges, as opposed to its filing of an enforcement action in federal court, is unconstitutional. In the following guest post, Gregory A. Markel, Vincent A. Sama, Daphne Morduchowitz, Giovanna A. Ferrari, and Matthew C. Catalano of the Seyfarth Shaw law firm review the Fifth Circuit’s opinion, and discuss its implications. I would like to thank the authors for allowing me to publish their article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is the authors’ article.
Continue Reading Guest Post: SEC’s In-House Adjudication Deemed Unconstitutional by Fifth Circuit

It arguably is not news that the SEC is monitoring disclosure and related issues concerning ESG. After all, the agency’s enforcement division formed an ESG Task Force in March 2021. And as discussed here, the Task Force recently launched its first ESG disclosure-related enforcement action. Now, in the Task Force’s latest move, the agency charged an investment advisor with securities law violations related to the advisor’s claims that its fund investments had undergone ESG quality review, even though that was not always the case. BNY Mellon Investment Adviser, Inc., the investment adviser involved, agreed to pay a $1.5 million penalty to settle the charges. As discussed below, this latest Task Force action underscores the fact that the ESG cops are on the beat, and they are actively monitoring ESG-related disclosures. That could have important implications for future SEC enforcement activity.
Continue Reading Attention: The ESG Cops Are On The Beat

In what is the latest step in what the Wall Street Journal has called “SEC Chairman Gensler’s wider push to rein in Wall Street through tougher regulation,” the SEC has approved, by a 3-1 vote, new proposed disclosure requirements and investor protections in connection with SPAC IPOs and de-SPAC transactions. The overall effect of the proposed new regulations, if implemented in a form similar to the proposal, would be to make the SPAC-related disclosure requirements more like those applicable to traditional IPOs. The proposed rules could have a sweeping impact not just on the SPAC IPO marketplace, but also on the marketplace for de-SPAC transactions, at a time when over 600 SPACs are currently searching for merger targets.

The SEC’s March 20, 2022 press release about the proposed new rules can be found here. The Commission’s 372-page proposal can be found here. The Commission’s short fact sheet about the proposed new rules can be found here. Cydney Posner’s detailed analysis of the proposal on the Cooley law firm’s PubCo blog can be found here.
Continue Reading SEC Proposed New SPAC-Related Disclosure Rules and Investor Protections

On March 21, 2022, the SEC, by a 3-1 vote along party lines, approved the issuance of proposed rule changes that, if adopted, would require all registered companies, including foreign issuers, to make specified disclosures related to climate change and greenhouse gas emissions in their registration statements and in annual SEC filings (such as reports on Form 10-K). As discussed below, the proposed disclosure requirements have already provoked significant commentary. The SEC’s 534-page proposed rule release can be found here. The SEC’s fact sheet about the proposed rules can be found here. The SEC’s March 21, 2022 press release about the proposed rules can be found here.
Continue Reading Thinking About the SEC’s Proposed Climate Change Disclosure Requirements

On March 9, 2022, the SEC finally released its long-anticipated updated cybersecurity disclosure requirements. The proposed rules, inclusive of specifications both for incident reporting and for risk management and governance disclosure, were adopted by a 3-1 vote and are now subject to a public reporting period. The new rules, which the Commission’s press release says are “designed to better inform investors about a registrant’s risk management, strategy, and governance and to provide timely notification of material cybersecurity incidents,” underscore the Commission’s emphasis on cybersecurity reporting and disclosure issues.

The SEC’s March 9, 2022 press release about the proposed new rules can be found here. The Commission’s two-page “fact sheet” about the new rules can be found here. The Commission’s 129-page proposing release can be found here. Cydney Posner’s March 9, 2022 post on the Cooley law firm’s PubCo blog about the proposed rules can be found here.
Continue Reading SEC Proposes New Rules for Cybersecurity Disclosure and Incident Reporting Rules

In a post last week, I noted that in FY 2021 the SEC had flied fewer enforcement actions against public companies compared to FY 2020. However, according to the SEC’s recently released fiscal year end enforcement activity report, the number of new enforcement actions overall (that is, inclusive of both public and private companies) increased by 7 percent in FY 2021. The SEC’s November 15, 2021 press release detailing the agency’s enforcement statistics can be found here. The enforcement action statistical breakdown for FY 2021 can be found here.
Continue Reading New SEC Enforcement Actions Overall Increased in FY 2021

As I have noted on this site, the SEC has in recent months filed SPAC-related enforcement actions, including the action filed in July 2021 against Stable Road Acquisition Corporation (discussed here), and the Y, 2021 action filed against Nikola Motors founder Chad Milton (discussed here). These matters were not, however, the first SPAC-related SEC enforcement actions; there have been others previously, including the September 2020 SPAC-related enforcement action against music streaming company Akazoo, S.A. In something of a milestone regarding SPAC-related actions, on October 27, 2021, the SEC announced that it had reached a settlement of the Akazoo enforcement action. The SEC’s October 27, 2021 press release about the settlement can be found here. The October 27, 2021 Agreed Final Judgment in the Enforcement Action can be found here.
Continue Reading SEC Enters Settlement in SPAC-Related Enforcement Action Against Akazoo

The standard view of the Biden Administration SEC under the leadership of Gary Gensler is that the agency will take a more active enforcement approach than was the case during the prior administration. Two developments in the past few days certainly support this standard view. First, in a speech last week, new SEC Enforcement Division Director Gurbir Grewal indicated that the agency will be requiring admissions of wrongdoing in some enforcement settlements. Second, in a statement the next day, SEC Chair Gensler announced that the agency would revitalize the rulemaking process with respect to rules regarding clawbacks of erroneously awarded compensation. As discussed below, these moves evidence a more aggressive approach to the enforcement of the securities laws. The text of Grewal’s October 13, 2021 speech can be found here. Gensler’s October 14, 2021 statement about the compensation clawback rules can be found here.
Continue Reading SEC Moves on Admissions and Compensation Clawbacks Underscore Tougher Enforcement Approach

In a series of statements, comments, and staff actions, the SEC has in recent months evinced a growing concern with SPAC-related activities in the financial marketplace. The agency has now brought its first SPAC-related enforcement action (at least during the current era) against Momentus, Inc., a SPAC-merger target; Stable Road Acquisition Corp., the SPAC itself; and several other participants involved in the SPAC transaction, including the SPAC sponsor. This proceeding may be the first of many. The SEC’s July 13, 2021 press release about the proceedings can be found here. The SEC’s administrative order instituting cease-and-desist proceedings can be found here. The SEC’s separate civil action complaint against the CEO of the merger target can be found here.
Continue Reading SEC Charges SPAC, Merger Target, and Others with Securities Law Violations