Republican lawmakers are wasting no time fulfilling their promise to make life unbearable for Wall Street’s top cop, Gary Gensler.
GOP lawmakers say the new rule, which requires the head of the Securities and Exchange Commission to provide comprehensive information on how public companies’ operations affect the climate, exceeds the agency’s statutory mandate to protect investors from fraud and maintain fair and efficient markets. They also believe that this will impose significant and unnecessary compliance costs on public companies that will be passed on to consumers.
Congressmen Bill Huizenga (R-MI) and Andy Barr (R-KY), both senior members of the House of Representatives Financial Services Committee, will pass new legislation on Friday designed to thwart Gensler’s efforts, making the SEC only will allow it to enforce disclosure requirements. information may prove important to investors.
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The legislation will become a companion bill to the Senate’s Mandatory Materiality Requirement Act, introduced in October by Senator Mike Rounds (R-SD) and Senator John Boozman (R-AR). Both bills aim to amend the Securities Act of 1933 and the Securities Exchange Act of 1934 by adding language that requires the SEC to determine whether certain information is important to investors before introducing new disclosure obligations.
Despite a vote scheduled for the new year, lawmakers say the road to a result will take months and will face a tough challenge from the Democrats who control the Senate and a possible veto from President Biden. But the bill heralds significant attention—and all but certain hearings and investigations—that the Incoming GOP majority in the House will give Gensler’s ambiguous agenda, including plans to overhaul the capital market structure and aggressive cryptocurrency legislation.
In addition to legislation, Gensler’s climate disclosure proposal has received significant backlash from major corporations in comment letters and will likely face legal action should the SEC eventually vote to approve the measure.
Legal arguments against the rules will focus on the so-called materiality standard, articulated by the Supreme Court in 1976, which states that an issue is “material” if there is “a significant probability that a reasonable shareholder will consider how it matters in making a decision.” vote.”
“The materiality standard is the investor-focused backbone of our capital markets. Minor reporting requirements, such as those outlined in the Securities and Exchange Commission’s proposed climate-related disclosure rule, place an unnecessary burden on companies and small businesses, discriminating against energy companies’ access. National Security, Money Congressman Andy Barr (R-KY), a prominent Republican member of the House Financial Services Subcommittee on Policy and International Development, said:
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The climate recommendation rule, released in March, will require public companies to disclose details about the greenhouse gas emissions they produce and report indirect emissions from their supply chain. The public opinion period, which closed in June, has reopened for further input until 1 November due to the controversial nature of the proposal.
Republican lawmakers have repeatedly criticized the climate proposal bill for being “awakened”, labeling it an attempt to introduce liberal ESG policies into US financial markets. ESG is a broad term used to describe an investment technique that has become both popular and controversial in recent years, as some investors demand corporate policies that not only maximize shareholder value but also take into account societal needs. It aims to force publicly traded companies to take steps to protect the environment, establish governance guidelines that ensure diversity, and adhere to principles that improve society.
Republicans aren’t the only ones criticizing the SEC’s Democratic Chair over his proposed rule-making. In October, a group of Senate Democrats led by John Tester (D-MT) wrote to Gensler asking him to slow down the rulemaking process and allow ample time for public feedback on his slew of new proposals.
In the first eight months of the year, the SEC proposed 26 new rules, more than double the number from the previous year, according to the SEC Inspector General.
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“American job creators are under constant attack from the harsh regulatory approach of the Securities and Exchange Commission under Gary Gensler,” Representative Bill Huizenga (R-MI) told FOX Business. “Nowhere is this clearer than the SEC’s overt desire to drastically expand disclosure requirements. Such expansion not only harms our economy, but negatively impacts small businesses and makes it harder for investors to retire with financial security.”