Mandatory Disclosures | Gensler Discusses at Columbia Law
SEC RELEASES
Introduction
On March 22nd, SEC Chair, Gary Gensler, spoke at a Columbia Law School conference. He discussed the importance of mandatory disclosures in our financial markets.
Although his comments are his alone and do not represent the SEC, his talks can give insight into the mentality of the leadership at the SEC.
Key Takeaways
- Gensler highlights three important benefits of mandatory disclosures.
- Information about securities is a public good.
- Managers can be incentivized to withhold the correct signals to shareholders of their companies.
- Efficient valuation and price discovery is enabled with complete and truthful disclosures.
- Gensler sees three major benefits for investors having access to required standardized disclosures.
- Prices will accurately reflect a company’s prospects and worth and allow for greater efficiency in the market.
- Capital will flow to its most productive use, with greater capital formation.
- Greater trust from the public when there is more information being disclosed.
- The SEC rulemaking reflects the importance of material disclosure.
- With 90% of the Russell 1000 disclosing climate-related information, and almost 60% of those top 1,000 providing greenhouse gas emission information, the SEC sees their climate disclosure rule adoptions as vital.
- Cybersecurity risks have increased to material levels of concern for investors, and due to the range of consequences from cybersecurity risks, the SEC chose to increase investor access to the information required to assess an investments cybersecurity risk.
- Investors in SPACs will be offered similar protection that traditional IPO investors have.
Vigilant’s Conclusion
As Firms continue to modify their compliance programs based off the numerous new rules and adoptions in the past couple of years, it is vital that Firms design their programs to be dynamic to ongoing changes.
Proactive compliance can provide a cost-effective solution that anticipates regulatory changes, instead of constantly trying to adjust and readjust to constant change. With what appears to be more rules likely to be finalized in 2024, reach out to Vigilant for any support you may need.