“ESG month” may not be exactly what you think. It’s the moniker, according to Politico, ascribed to the plan of the House Financial Services Committee, reflected in this interim report from its ESG Working Group, “to spend the next few weeks holding hearings and voting on bills designed to send a clear signal: Corporations, in particular big investment managers, should think twice about integrating climate and social goals into their business plans.” But this is not just another generic offensive in the culture wars; according to Politico, this effort is more targeted—aimed not at major brands of beer or amusement parks, but rather at the processes that some argue activists use to pressure companies to address ESG concerns, as well as the “firms that play big roles in ESG investing.” At the first of six hearings on July 12, Committee Chair Patrick McHenry maintained that the series of hearings and related proposed legislation was not about “delivering a message,” but was rather about protecting investors and keeping the markets robust and competitive. First item up? Reforms to the proxy process to prevent activists from diverting attention from core issues; while he supported shareholder democracy, he believed that democracy should reflect the say of the shareholders, not external parties that, in his view, exploit the existing process to impose their beliefs. The Working Group appears to have identified the shareholder proposal process as instrumental in promoting ESG concerns. Will this spotlight have any impact?
Congress now seems to be all over this SPAC phenomenon. Last week a subcommittee of the House Financial Services Committee held a hearing on “Going Public: SPACs, Direct Listings, Public Offerings, and the Need for Investor Protections.” What is the headline from the hearing? All the witnesses agreed that, to prevent regulatory arbitrage, all IPO vehicles, whether traditional IPOs or SPACs, should operate on a level playing field and be subject to the same type of regulation of disclosure and liability. Many House members also took the opportunity to promote their own proposed or pending legislation about the capital markets, and several House members offered their recommendations for a happy marriage. At a separate hearing, SEC Chair Gary Gensler gave testimony before a different subcommittee, which in part addressed SPACs. Is some kind of Congressional action in the offing?
All five SEC Commissioners testified yesterday at an oversight hearing held by the House Financial Services Committee, the first time all five have appeared since 2007, according to Chair Maxine Waters. (Here is their formal testimony.) These hearings are, of course, broken up into bite-size five-minute Q&A sessions, so there is not much opportunity for in-depth questioning. And most often, it seemed that the Representatives directed their questions to the Commissioners that were most likely to provide gratifying answers—meaning a Commissioner of the Representative’s own party. There were, however, some notable exceptions, such as Representative Katie Porter’s pointed questioning of Commissioner Hester Peirce with regard to her views on ESG disclosure. In the end, the hearing did provide some insight into the current thinking and expectations of many of these legislators and regulators.
There’s been chatter about board gender diversity for a long time and, while there has been some modest progress, we have yet to see any dramatic breakthroughs. Now some of the largest asset managers are not just talking the talk, they are also walking the walk. Will it make a difference? Time will tell.
by Cydney Posner With Congress and the Presidency soon in Republican control, look for the Financial CHOICE Act (or perhaps an enhanced version) to be re-introduced in the next Congress. The bill, sponsored by Jeb Hensarling, Chair of the House Financial Services Committee, was framed as a Republican proposal to […]
by Cydney Posner A discussion draft for the Financial CHOICE Act is now publicly available. Many of the provisions of interest from a corporate standpoint are in Title IV—Capital Markets Improvements and Title X—Unleashing Opportunities for Small Business, Innovators, and Job Creators by Facilitating Capital Formation. (It doesn’t exactly unleash […]
The Financial CHOICE Act would dismantle a whole lot more in Dodd-Frank than just financial regulation
by Cydney Posner There has been a fair amount of press regarding the Financial CHOICE Act, a new bill sponsored by Jeb Hensarling, Chair of the House Financial Services Committee. The actual bill has not yet been released, but an executive summary is available. Most of the press attention has […]
by Cydney Posner The WSJ is reporting that the SEC staff has spent an aggregate of 7,196 hours since 2011 working on the development of the still-in-the-proposal-stage pay-ratio disclosure rules required under Dodd-Frank. According to a letter from SEC Chair Mary Jo White to the House Financial Services Committee, that […]
by Cydney Posner The WSJ reports that three Republican congressman — House Financial Services Committee Chairman Jeb Hensarling, and Reps. Scott Garrett and Bill Huizenga — have written to SEC Chair Mary Jo White urging that the SEC stop spending time on the pay-ratio disclosure rules and prioritize completing rulemaking […]