June 1, 2023

Evolution of a Disclaimer: The SEC Revisits Its Approach

When I first began speaking at conferences as an SEC employee back in the 1990s, it was ingrained in me that, before making any remarks, I must first give the “standard disclaimer,” or else some terrible consequences would be visited upon me. My early training worked, because invariably I would say the disclaimer, and even to this day when I am on a panel with someone from the SEC, I will prompt them to give their disclaimer or stop the discussion to give the person an opportunity to state the disclaimer if they forget to do so. Over the years I have even poked fun at the SEC disclaimer, as in this puppet show from the 2015 Proxy Disclosure Conference. Who knew puppets had disclaimers?

The one unusual thing about the standard disclaimer is that it stayed the same for as long as I can remember. In the almost three decades that I have been practicing, SEC speakers have been saying pretty much the same disclaimer: “The views I express today are my own and do not necessarily reflect the views of the Commission, the Commissioners or the Staff.” Even when I was engaged in the rote recitation of this disclaimer, it always struck me as odd that, as a representative of the SEC at the program, I was saying that I only expressed my own views, even though obviously the views I discussed on the panel were very much aligned with SEC policy at the time. Perhaps the disclaimer made more sense for the Commissioners, who in their speeches often express political or ideological views that are not necessarily aligned with the views of the Chairman or the other Commissioners. In any event, the disclaimer was what it was, and I did not dare to alter it out of fear of suffering the unknown consequences.

That all leads us to a curious development that has emerged in just the past month that was recently highlighted by Professor Benjamin Edwards on the Business Law Prof Blog. Professor Edwards notes that the disclaimer has changed in very recent speeches made by SEC Chair Gensler and others at the SEC. For example, in remarks at the Municipal Securities Disclosure Conference in May, Chair Gensler stated: “My views are my own as Chair of the SEC, and I am not speaking on behalf of my fellow Commissioners or the staff” (emphasis added). Further, in a speech last week to the Investment Company Institute, Chair Gensler stated: “As is customary, I’d like to note that my views are my own as Chair of the Securities and Exchange Commission, and I’m not speaking on behalf of my fellow Commissioners or the SEC staff” (emphasis added). The change is also evident in speeches by the SEC Staff, as I noted in recent remarks by the Director of the Division of Investment Management: “I must remind you all that my remarks today are provided in my official capacity as the Commission’s Director of the Division of Investment Management but they do not necessarily reflect the views of the Commission, the Commissioners, or members of the staff” (emphasis added). Professor Edwards indicates that this overall change in approach to the disclaimer likely arises from some recent litigation developments:

The changed language likely results from discovery disputes in SEC vs. Ripple Labs. Some news reports have covered the SEC being forced to turn over documents related to a 2018 Speech by William Hinman, then the SEC’s Director for the Division of Corporation Finance.

I poked around the docket in that case and found an order finding that internal discussions about the Hinman speech were discoverable and not protected by the Deliberative Process Privilege (DPP) because Hinman was communicating his own opinions and they did not “relate to some form of agency position, decision, or policy”.

At least with these recent changes the disclaimer makes more sense, in that the speaker acknowledges that they are speaking in their official capacity and not just expressing their own personal views. Now I need to think about whether my puppet disclaimer needs to change going forward.

– Dave Lynn