Wagner Delivers Remarks at Hearing to Conduct Oversight of the SEC’s Division of Corporation Finance
Washington,
July 18, 2023 -
Today, the House Financial Services Subcommittee on Capital Markets, led by Chairman Ann Wagner (MO-02), is holding a hearing entitled, “Oversight of the SEC’s Division of Corporation Finance.”
Watch Chairman Wagner’s opening remarks here.
Read Chairman Wagner’s opening remarks as prepared for delivery.
“Thank you for joining us today. This hearing will examine the actions taken by the SEC’s Division of Corporation Finance under Director Erik Gerding’s leadership.
“These actions have far-reaching implications for millions of retail investors and the overall health of public markets. Director Gerding’s controversial rulemakings and decisions threaten to undermine the attractiveness of public markets and stall economic growth at a time when global competition is on the rise.
“The SEC’s primary role is to maintain fair, orderly, and efficient markets while facilitating capital formation and protecting investors.
“However, the recent actions of the Division of Corporation Finance have deviated from this core mission, pushing an unconventional and partisan agenda that hampers the free market system. The burden of excessive regulations and politically motivated disclosure requirements falls heavily on small and medium-sized companies, impeding their growth.
“It is crucial that the SEC changes its course and fosters a market system that is competitive and dynamic.
“One specific area of concern is the rollback of the July 2020 proxy advisor rule, which was intended to ensure transparency in proxy voting decisions. This rollback undermines necessary reforms to the proxy advisory duopoly and fails to protect the interests of retail investors seeking to maximize the return on their investment.
“Moreover, costly disclosure regulations on environmental and social policies will harm companies by obstructing their business expansion and hindering them from hiring additional employees.
“For example, in 2022, politicized investors at Comcast proposed that the company report on its retirement plan options in relation to climate action goals.
“This attempt to use retiree funds for fringe political purposes could have resulted in lower returns or higher risk for investors had it been successful. Similarly, other proposals, such as emissions targets from Costco, have no material impact on the company’s financial performance.
“By limiting their ability to generate returns, retail investors, who rely on these returns for their retirement savings, will be directly affected. It is our duty to protect their interests and ensure their success within our capital markets.
“To restore the SEC’s integrity and realign its actions with its mission of investor protection and capital formation, we must prioritize the interests of retail investors.
"It is essential that we create an environment that maximizes opportunities for their success.
“We’ve heard in previous hearings how important maintaining a variety of attractive pathways for raising capital is for businesses. Excessive regulatory and compliance costs act as barriers to entering the public markets, leading many companies, especially smaller ones, to turn to private markets.
“Unfortunately, Democrats view private market growth as problematic, and have pushed for more disclosure requirements and regulatory burdens. For example, it has been suggested that the SEC will require heightened disclosure obligations for large private companies on Form D.
“Committee Republicans strongly oppose this approach, as it would in effect discourage private companies from remaining private.
“The recent actions of the SEC's Division of Corporation Finance, along with proposed cybersecurity disclosure rules, private market regulations, and conflicts of interest in securitizations, pose a threat to our markets and the free market system.
“Our parents and grandparents worked their entire lives to save for retirement. It is the duty of the SEC to ensure American retirement accounts are not used as a tool for partisan political social agendas.
“The SEC needs to follow its congressionally mandated directives to facilitate capital formation and protect investors, and under Director Erik Gerding’s leadership that is not happening.”
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