TheCorporateCounsel.net

With the election in the rear-view mirror, many people are speculating about the potential implications of Trump 2.0 for the SEC and securities regulation in general.  Some of these are pretty obvious – Donald Trump promised that Gary Gensler would be a goner “on day one,” and he seems likely to depart even before Trump takes office. The SEC’s climate disclosure rules also are almost certainly on the chopping block, and its long-delayed proposals on human capital management and corporate board diversity disclosures will probably never see the light of day.

Those political footballs may garner most of the headlines during the next few months, but what about the Trump Administration’s approach to more “meat & potatoes” securities law issues?  Even though Donald Trump claims to know nothing about Project 2025, plenty of others in his orbit do, and it seems likely that many of the policy objectives laid out in that document will be on the agenda when it comes to securities regulation. For example, in the area of capital formation, the Project 2025 document calls for the SEC to take, among others, the following actions:

– Simplify and streamline Regulation A (the small issues exemption) and Regulation CF (crowdfunding) and preempt blue sky registration and qualification requirements for all primary and secondary Regulation A offerings.

– Either democratize access to private offerings by broadening the definition of accredited investor for purposes of Regulation D or eliminate the accredited investor restriction altogether.

– Allow traditional self-certification of accredited investor status for all Regulation D Rule 506 offerings.

– Exempt small micro-offerings from registration requirements.

– Exempt small and intermittent finders from broker–dealer registration requirements and provide a simplified registration process for private placement brokers.

Project 2025 also makes several recommendations aimed at the way the SEC is administered, including ensuring that any three commissioners have the ability to place an item on the agency’s agenda, eliminating all SEC administrative proceedings other than stop orders, or allowing respondents to elect whether their cases will be adjudicated by an ALJ or an Article III federal court, and ending the practice of delegating authority to the Staff to initiate an enforcement proceeding.

These would all be significant changes, but Project 2025’s legislative agenda when it comes to the securities laws is even more ambitious. In addition to proposing a comprehensive overhaul of the federal securities laws, it calls for Congress to eliminate the PCAOB and FINRA and consolidate their functions within the SEC, eliminate Dodd-Frank’s conflict minerals, mine safety, resource extraction and pay ratio disclosure requirements, and ban the SEC from requiring a variety of ESG-related disclosures.

– John Jenkins