by Cydney Posner

According to this article in the WSJ,  SEC Commissioner Michael Piwowar, who will probably become acting Chair when current Chair Mary Jo White steps down this month, has agreed with fellow Commissioner Kara Stein about various rulemakings that they might pursue in the interim until nominee Jay Clayton is confirmed as Chair. Apparently, they don’t include rules required by Dodd-Frank.

You might remember that, in addition to bank-related rules, there were a number of governance- and compensation-related rules mandated by Dodd-Frank that were proposed in 2015 but never adopted, such as compensation clawbacks (see this PubCo post), pay-versus-performance disclosure (see this PubCo post) and hedging disclosure (see this PubCo post).  The WSJ reports that, in this interim period, Dodd-Frank rulemaking will not be “prioritized.” According to the WSJ, Commissioner Piwowar stated that, “[a]s someone who is highly likely to be chair of an agency during an interim period, what I don’t want to do is move forward with something that is going to be repealed or changed anyway….We have scarce resources that can be put to better use.”  This is not a new tune for Commissioner Piwowar.  As reported in the PubCo posts cited above, he has often expressed dismay over the time spent developing proposals to implement the compensation-related provisions of Dodd-Frank, which he believes represented a misallocation of SEC resources.

Instead, the WSJ reports, the SEC will continue with its effort to modernize corporate disclosures, the Disclosure Effectiveness Initiative. (See this PubCo post  and this PubCo post. Note, however, that the two commissioners have quite different views on the purpose of the Initiative and the direction they would like to see it go.  At the SEC open meeting to vote on issuance of the concept release related to disclosure effectiveness (see this PubCo post), Commissioner Stein expressed concern that the release did not specifically address many ESG topics, such as diversity and inclusion measures. She contended that  “[s]ustainability disclosure differentiates companies and it may foster investor confidence, trust, and employee loyalty.  More importantly for investors, companies that adopt certain environmental, social, and corporate governance or ESG measures may perform better than those that do not.”  Commissioner Piwowar had quite a different perspective. He emphasized that both the JOBS Act and FAST Act required the SEC to study Reg S-K to simplify reporting and reduce costs to companies. In that light, he took issue with any effort to expand the nature of disclosure to cover items that were not strictly “material,” as opposed to merely useful or interesting to some shareholders, or, as he put it, allowing these shareholders to “hijack corporate resources to serve their own agendas.”  Presumably, he was taking direct aim at this aspect of the release regarding sustainability and ESG disclosures. (See this PubCo post.)

Commissioner Piwowar also told the WSJ that both commissioners want to go forward with the proposal to shorten the standard settlement cycle for most broker-dealer transactions from three business days after the trade date to two business days after the trade date, i.e., T+2.  (See this PubCo post.)

Posted by Cydney Posner