Can the tone or sentiment of an SEC comment letter provide a signal to investors about the quality of an underlying firm? In a new study, I examine that question in the context of Reg A filings.[1] My study, though still at a preliminary stage, suggests an intriguing relationship between the sentiment expressed in SEC staff comment letters and the likelihood of qualification for proposed Reg A offerings. Insights from private company filings reveal a strong linkage between SEC comment letter sentiment and eventual registration approval. A comment letter is a communication sent by the SEC follo ..read more

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. Investment Company Act of 1940 There is a saying when you’re in the woods. “You don’t have to outrun the bear; you just have to outrun one of your fellow campers.” A bit gruesome, yet this helps explain why investors might try to cash out of investments before the proverbial bear—of dilution and illiquidity—catches them. It also helps explain why savers might try to cash out of deposits before that proverbial ..read more

I am pleased to welcome everyone to the Division of Investment Management’s inaugural Conference on Emerging Trends in Asset Management. As is customary, I’d like to note that my views are my own as Chair of the Securities and Exchange Commission, and I am not speaking on behalf of my fellow Commissioners or the staff. Later this month marks 90 years since President Franklin Roosevelt signed the first of the federal securities laws, the Securities Act of 1933. Roosevelt and Congress knew, however, that their work wasn’t done. That’s why they passed the Securities Exchange Act of 1934, which c ..read more

Financial markets and securities regulation in the European Union and the United States are converging in an increasing number of areas, from the repression of market manipulation to the provision of stricter requirements for market gatekeepers, such as auditing firms and credit rating agencies. The reasons are clear: EU and U.S. lawmakers want to protect investors and ensure the correct functioning of the financial markets. Accordingly, in both jurisdictions, issuers must disclose material corporate information because timely and comprehensive disclosure of this information leads to more accu ..read more

Aligning with the growing importance of ESG concerns to investors, and coinciding with increased investor appetite for ESG-related investment portfolios, the SEC created the Climate and ESG Task Force (the “Task Force”) within the Division of Enforcement on March 4, 2021. At the time, the SEC announced that the Task Force would develop initiatives to actively identify ESG-related misconduct, focusing on matters such as identifying material misstatements or gaps in issuer disclosure of climate risks under existing rules, and pursuing tips and whistleblower complaints on ESG-related issues–bols ..read more

The Securities and Exchange Commission (SEC or Commission) is considering proposals that would require public companies to disclose reliable and complete information about the risks of climate change.  The Commission’s efforts will fall short, however, unless it addresses the role of lawyers in the disclosure process. Under the federal securities laws, legal obligations for accurate disclosure of material information rest with the company and are typically the responsibility of executive management. Yet in making these determinations, management relies on lawyers. Few public companies wou ..read more

Good afternoon. I’m pleased to be back for what I’m told is the fifth time speaking before the International Swaps and Derivatives Association (ISDA). As is customary, I’d like to note that my views are my own as Chair of the Securities and Exchange Commission, and I am not speaking on behalf of my fellow Commissioners or the staff. May 27 marks 90 years since President Franklin Roosevelt signed the first of the federal securities laws: the Securities Act of 1933.[1] On that same day, the 1933 Chicago World’s Fair began.[2] In a statement for the grand opening, Roosevelt inaugurated “a century ..read more

The rise of private markets and the proliferation of “unicorns” (private startup companies valued at $1 billion or more) has diminished the SEC’s power and reach. Back in 2021, the agency signaled a plan to reassert itself by forcing unicorns to go public. But the plan fizzled; its legality was called into question and key proponents departed without taking action. Now the regulator has a new strategy. In January, Commissioner Caroline Crenshaw proposed a mandatory periodic disclosure regime for unicorns.  She would have the agency revise Regulation D to require these companies “to engage ..read more

The contraction of the market for special purpose acquisition companies (SPACs) and the recent challenges de-SPACed companies have encountered have attracted considerable press attention. The stocks of many de-SPACed businesses — companies formed by the merger of a SPAC with an operating business — are trading well below the SPACs’ original IPO price, and a number have filed for bankruptcy. Some press reports frame these bankruptcies as evidence that the 2020-21 SPAC boom was a “fad” driven by “hype” and “speculati[on],”1 but the reality is more complicated. Most de-SPACed companies that ..read more

There is reason to believe the SEC’s new universal proxy Rule 14a-19 will result in more stockholder nominees being elected to the boards of public companies. First, the rule allows voting stockholders to make their own ad hoc choice of nominees from the slates proposed by management, on one hand, and by the nominating stockholder, on the other. The ability to more easily “split the ticket” will no doubt appeal to proxy advisors and others eager to display Solomonic wisdom (and forgetting that Solomon did not really advocate splitting the baby). Second, the new rule eliminates the need for act ..read more