Results for: conflict minerals
Will the new Congress use the Congressional Review Act to nullify recent rulemakings?
You might remember that the first piece of legislation signed into law by the then-new (now outgoing) administration in 2017 was, according to the Washington Post, a bill that relied on the Congressional Review Act to dispense with the resource extraction payment disclosure rules. (See this PubCo post.) Under the CRA, any rules that were recently finalized by the executive branch and sent to Congress could be jettisoned by a simple majority vote in Congress and a Presidential signature. According to the Congressional Research Service, before the current outgoing administration took up the cudgel in 2017, “[o]f the approximately 72,000 final rules that [had] been submitted to Congress since the [CRA] was enacted in 1996, the CRA [had] been used to disapprove one rule: the Occupational Safety and Health Administration’s November 2000 final rule on ergonomics, which was overturned using the CRA in March 2001.” That’s because the stars are rarely in proper alignment: generally, the CRS indicated, for successful use, there will have been a turnover in party control of the White House and both houses of Congress will be majority–controlled by the same party as the President. That was the case in 2017, and, as of January 9, 2020, the CRA had been used to overturn a total of 17 rules, according to the CRS. Well, the stars are in proper alignment now. To observe that the new Congress and new administration have a lot on their plates is quite an understatement. Will they use the CRA to scrap any of the SEC’s “midnight regulations”?
SEC adopts final resource extraction disclosure rules
At an open meeting yesterday, the SEC adopted, by the usual three to two, final Rule 13q-1 and an amendment to Form SD to implement Section 1504 of Dodd-Frank, which relates to disclosure of payments by resource extraction issuers. These rules, last proposed almost exactly a year ago (see this PubCo post), have had a long and troubled history. This effort at new resource extraction disclosure rules represents the SEC’s third attempt at these rules—making their consideration a holiday tradition, according to SEC Commissioner Hester Peirce—and today is almost on target as the tenth anniversary of the original proposal. Will the third time be the charm? Even if you’re not remotely drawn to the subject matter of these rules, you might nevertheless find worthwhile the debate at the meeting about whether this rulemaking was appropriately within the remit of the SEC: was the mandate about informing and protecting investors, maintaining orderly markets or facilitating capital formation or was it rather about social policy unrelated—or at most distantly related—to the SEC’s core mission? Will the majority view on that question have any influence on future legislation?
House appropriations bill seeks to hamstring SEC on significant proposals and rules
You might think Congress would be too busy these days—what with a pandemic raging across the U.S., looming economic catastrophe and spiraling unemployment—to worry about the resubmission thresholds for shareholder proposals, but nope, they’re all over it. In the latest version of the appropriations bill passed in the House, known as the ‘‘Defense, Commerce, Justice, Science, Energy and Water Development, Financial Services and General Government, Homeland Security, Labor, Health and Human Services, Education, Transportation, Housing, and Urban Development Appropriations Act, 2021’’ for short, the bill authorizes funding for the SEC, while at the same time, putting the kibosh on various items on the SEC’s Spring RegFlex agenda (see this PubCo post)—and even on regulations that have already been adopted. But whether these provisions survive or are jettisoned in the Senate is another question.
What’s on the SEC’s Spring 2020 RegFlex Agenda?
With so much going on in connection with COVID-19 and its impact, it would be easy to overlook the rest of the SEC’s agenda. And it’s a lengthy one. The new Spring Regulatory Flexibility Act Agenda was published at the end of June, so it’s time to look at what’s on deck for the SEC in the coming year or so. (That reference to “on deck” may be the only sports anyone gets this year….) SEC Chair Jay Clayton has repeatedly made clear his intent to make the RegFlex Agenda more realistic, streamlining it to show what the SEC actually expects to take up in the subsequent period. (Clayton has previously said that the short-term agenda signifies rulemakings that the SEC actually planned to pursue in the following 12 months. See this PubCo post and this PubCo post.) The SEC’s Spring 2020 short-term and long-term agendas reflect the Chair’s priorities as of March 31, when the agenda was compiled. What stands out here are the matters that have, somewhat surprisingly, moved up onto the final-rule-stage agenda—think universal proxy—from perpetual residence on the long-term (i.e., the maybe never) agenda.
SEC extends conditional relief related to coronavirus (COVID-19)
Today, in light of the continuing impact of COVID-19, the SEC issued an order extending the filing periods covered by its previous conditional reporting relief. The order provides public companies with a 45-day extension to file or furnish specified SEC filings that would otherwise have been due between March 1 and July 1, 2020. The order supersedes and extends the SEC’s original order of March 4, 2020, which had applied to filings due between March 1 and April 30, 2020. As SEC Chair Jay Clayton observed, “[h]ealth and safety continue to be our first priority….These actions provide temporary, targeted relief to issuers, investment funds and investment advisers affected by COVID-19. At the same time, we encourage public companies to provide current and forward-looking information to their investors and, in these uncertain times, companies are reminded that they can take steps to avail themselves of the safe harbor in Section 21E of the Exchange Act for forward-looking statements.” At the same time, the staff of Corp Fin issued Disclosure Guidance Topic No. 9, which offers the staff’s views regarding disclosure considerations and other securities law obligations in the context of COVID-19 and related uncertainties (to be covered in a separate post). The SEC encourages companies to contact the SEC staff with questions or matters of particular concern, such as administrative issues related to inability to obtain a required signature due to a quarantine or other issues that may need to be addressed on a case-by-case basis.
Nasdaq to propose new tier for thinly traded securities
It’s well recognized that the equity markets work pretty well for companies that trade in high volumes, but companies with low trading volumes? Not so much. Thinly traded securities often face liquidity challenges, including wider spreads, higher transaction costs, fewer market makers and potential difficulties for investors that seek to unwind their positions. These issues can discourage small- and medium-sized enterprises from accessing the public markets, a problem that the SEC has been anxious to address. To find potential solutions for these problems, in October 2019, the SEC solicited proposals for changes in equity market structure designed to improve the secondary trading markets for thinly traded securities. Nasdaq has just announced that it has submitted to the SEC an application for exemptive relief that would facilitate its proposal “to establish a tier nestled [sounds very cozy!] within the U.S. public equity markets that is better tailored and far more hospitable to thinly-traded securities than is the all-purpose, undifferentiated market environment in which they suffer today.”
SEC proposes new accredited investor definition and new rules for disclosure of payments by resource extraction issuers (updated)
At an open meeting this morning, the SEC proposed changes to the definition of “accredited investor,” as well as new rules relating to disclosure of payments by resource extraction issuers. As discussed below, Commissioners Robert Jackson and Allison Lee dissented on both of these proposals. Notably, the responses of all the Commissioners to these proposals highlighted their sharply divergent views on the role of government and the fundamental purposes of the securities laws. Both proposals will be open for comment for 60 days.
What’s on the SEC’s new fall 2019 agenda?
SEC Chair Jay Clayton has streamlined the Regulatory Flexibility Act Agenda to limit it to the rulemakings that the SEC actually expects to take up in the subsequent period. Clayton has previously said that the short-term agenda signifies rulemakings that the SEC actually plans to pursue in the following 12 months. (See this PubCo post and this PubCo post.) The SEC’s Fall 2019 short-term and long-term agendas have now been posted, reflecting priorities as of August 7, the date on which the SEC’s staff completed compilation of the data. Items on the short- and long-term agendas are discussed below.
SCOTUS keeps agency deference alive in Kisor v. Wilkie. But is it just a “stay of execution”?
Today, SCOTUS decided Kisor v. Wilkie, an important case that raised the question of whether to overrule the decades-long deference of courts to the reasonable interpretations by agencies (such as the SEC) of their own ambiguous regulations, often referred to as Auer deference (or Seminole Rock deference, referring to Auer’s antecedent). SCOTUS, with Justice Kagan writing the majority opinion (with Chief Justice Roberts as the swing vote), said no. Justice Gorsuch (and three other Justices) would overturn Auer. According to Gorsuch, the majority’s decision was “more a stay of execution than a pardon.”
What’s on the SEC’s new RegFlex Agenda?
SEC Chair Jay Clayton has repeatedly made a point of his intent to take the Regulatory Flexibility Act Agenda “seriously,” streamlining it to show what the SEC actually expected to take up in the subsequent period. (Clayton has previously said that the short-term agenda signifies rulemakings that the SEC actually planned to pursue in the following twelve months. See this PubCo post and this PubCo post.) The SEC’s Spring 2019 short-term and long-term agendas have now been posted, reflecting the Chair’s priorities as of March 18, when the agenda was compiled. What stands out is not so much the matters that show up on the short-term agenda—although there are plenty of significant proposals to keep us all busy—but rather the legislatively mandated items that have taken up protracted residency on the long-term (i.e., the maybe never) agenda.
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