Gary Gensler was seated as SEC Chair on April 17, but he is already making a mark on the agency, as demonstrated by the following recent developments, among others:
- On June 1, Gensler issued a statement directing the SEC staff to consider revisiting 2019 interpretations and 2020 rule amendments that imposed new burdens on proxy advisory firms. The same day, the SEC’s Division of Corporation Finance posted an interpretation saying that “it will not recommend enforcement action” based on the interpretations and amendments, and that if the interpretations and amendments remain in place, it will continue to refrain from recommending their enforcement “for a reasonable period of time” after any resumption of the ISS litigation against the SEC challenging the interpretations and amendments. The reversal of a recent interpretation or amendment is highly unusual and may be unprecedented.
- In another possibly unprecedented action, on June 4 the SEC announced the removal of PCAOB Chair William D. Duhnke and its intention to seek candidates to fill all five board positions on the PCAOB. The announcement included a statement from Gensler that “[t]he PCAOB has an opportunity to live up to Congress’s vision in the Sarbanes-Oxley Act,” suggesting that it has not been doing so, and that the actions would “set [the PCAOB] on a path to better protect investors.”
- And on June 7, Gensler announced that he has asked the staff to make recommendations on revisions to SEC Rule 10b5-1, the rule that permits so-called trading plans enabling insiders to purchase or sell stock based on predetermined formulas or algorithms without exposing themselves to liability for insider trading. In his remarks, Gensler said that he believes “these plans have led to real cracks in our insider trading regime.” He suggested that the changes may involve requiring significant cooling-off periods before a plan becomes operational, requirements for additional disclosure, and limitations on the ability to cancel plans.
Please direct any questions or observations to Gunster securities law and corporate governance practice leader Bob Lamm.
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This publication is for general information only. It is not legal advice, and legal counsel should be contacted before any action is taken that might be influenced by this publication.
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