November 17, 2022

The Midterms are (Almost) Over: What Now?

I don’t know about you, but I am exhausted from the midterm election cycle. Despite my best efforts to withdraw entirely from political discourse, I feel like I was bombarded with political ads for what seems like most of this year, and those ads (along with the endless news coverage) tended to be infuriating for even the most withdrawn individual.

After all of that suffering, we now find ourselves in largely the same place we were when the whole midterm election cycle kicked off. While the Democrats lost control of the House, that Republican majority does not appear to be large enough to make a huge legislative difference, while Democrats maintain a majority in the Senate. What will all of this mean for the SEC’s aggressive regulatory agenda?

First off, it is always important to keep in mind that the SEC is an independent agency, structured to be somewhat insulated from the shifting political winds, but we all know that is not really the case in practice, particularly in modern times when the agency has become much more politicized. With that said, the Republican majority in the House will undoubtedly try to make things difficult for the Commission, as new committee leadership will use the tools that they have available to try to influence or frustrate the SEC’s actions. On the Senate side of things, we can expect business as usual, with the minority continuing to express displeasure with the SEC’s agenda while the majority wants all of the rulemaking to be completed yesterday.

The midterm elections obviously did not leave us with any clear mandate one way or the other, so despite some efforts on the part of lawmakers to frustrate its agenda, the SEC would appear to be destined to continue full speed ahead along its current regulatory path. The agency will no doubt be encouraged in those efforts by the Biden Administration, which would probably like to see a significant number of the SEC’s more progressive regulatory initiatives (such as climate change disclosure, share repurchase disclosure, Rule 10b5-1 amendments and cybersecurity disclosure) brought to completion before the 2024 Presidential election campaign kicks into high gear sometime next year.

I can only hope that, at least for the next few months, I can get some relief from the onslaught of campaign ads and political news coverage. I am sure my television is tired of me screaming at it.

– Dave Lynn