TheCorporateCounsel.net

Yesterday, SEC Chair Gary Gensler testified before the United States Senate Committee on Banking, Housing, and Urban Affairs. In his prepared remarks, Gensler discussed a wide range of topics, including his views on issuers and issuer disclosure. He stated:

For the last 90 years, our capital markets have relied on a basic bargain. Investors get to decide which risks to take as long as companies provide full, fair, and truthful disclosures. Congress tasked the SEC with overseeing this bargain. We do so through a disclosure-based regime, not a merit-based one. Over the decades, we have updated our rule set to elicit disclosures of information relevant to investors’ decisions.

Increasingly, over the last number of years, investors are making investment decisions based upon factors that include the risks and opportunities related to climate and cybersecurity. Today, climate-related factors and risks as well as cybersecurity risks both can affect a company’s bottom line and its future, and therefore an investor’s decision to buy, hold or sell a security or how to vote a proxy. Today, investors are already making decisions based upon information about climate and cyber risks. Hundreds of companies are already disclosing such information, pursuant to disparate frameworks, in a manner that lacks consistency and reliability.

With respect to crypto, Gensler was pretty clear on his views about the applicability of the securities laws to tokens:

Of the nearly 10,000 tokens in the crypto market, I believe the vast majority are securities. Offers and sales of these thousands of crypto security tokens are covered by the securities laws, which require that these transactions be registered or made pursuant to an available exemption. Thus, I’ve asked the SEC staff to work directly with entrepreneurs to get their tokens registered and regulated, where appropriate, as securities. Given the nature of crypto investments, I recognize that it may be appropriate to be flexible in applying existing disclosure requirements.

Gensler also addressed a number of other areas the SEC is focused on maintaining the “gold standard” of regulation.

– Dave Lynn