The Financial Services Committee of the United States House considers the supervisory legislation of the SEC – Finance and Banking

House Financial Services Committee considers credit reporting legislation fair - Finance and Banking

Cadwalader, Wickersham & Taft LLP

08 October 2021

Highlights


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In a hearing titled “Oversight of the U.S. Securities and
Exchange Commission: Wall Street’s Cop Is Finally Back on the
Beat,” the Committee considered:

The U.S. House Financial Services Committee considered legislation to expand and
reinforce the SEC’s authority to pursue its “mission [] to
(1) protect investors; (2) maintain fair, orderly, and efficient
markets; and (3) facilitate capital formation.” As cited in
the Majority Staff Memorandum, the SEC’s fiscal year 2023
budget request of $2.169 billion reflects an 8.8 percent increase
from fiscal year 2022 “in order to address key priority
areas” and hire additional SEC staff to oversee increasingly
complex issues such as digital assets.

H.R. ____, which would strengthen the
SEC’s Office of the Investor Advocate under the Exchange Act and authorize the Office to
conduct investor testing and publicize its findings;

H.R. ____, the “Investor Justice Act of
2021,” which would establish a grant program under the
SEC’s Office of the Investor Advocate to fund “qualified
investor advocacy clinics”;

H.R. ____, which would amend the Exchange Act
to establish minimum listing standards for multi-class stock
companies in regard to non-proportional voting power and board
diversity;

H.R. 2620, the “Investor Choice Act of
2021,” which would prohibit mandatory pre-dispute arbitration
agreements and mandatory arbitration clauses that require investors
to waive their right to seek redress through a class action
lawsuit;

H.R. ____, the “Whistleblower Protection
Reform Act,” which would amend the definition of whistleblower
and expand anti-retaliation protections afforded to
whistleblowers;

H.R. ____, which would amend the Advisers Act
to prohibit brokers and investment advisers from facilitating the
transaction of securities of special purpose acquisition companies
(“SPACs”) with a promote of more than 5 percent; and

H.R. ____, the “Empowering States to
Protect Seniors from Bad Actors Act,” which would create a
grant program for states to enhance the protection of senior
investors.

In testimony before the Committee, SEC Chair Gary
Gensler reiterated the SEC’s regulatory
priorities, as he did before the U.S. Senate Banking
Committee last month, highlighting market structure,
predictive data analytics, issuers and issuer disclosure, and funds
and investment management.

Commentary The title of the hearings, “Wall Street’s Cop Is
Finally Back on the Beat,” says it all: financial markets and
market participants are bad, and fines are coming.

The individual bills cited seem largely intended to encourage
litigation or lay the grounds for enforcement actions. Whatever problems there may be with SPACs, legislation fixing
the “promote” at 5 percent is completely arbitrary
and premature. The SEC has plenty of authority to regulate SPACs,
and FINRA has plenty of authority to regulate their distribution.
Before Congress rushes to adopt arbitrary legal standards, it
should at least give the SEC an opportunity to conduct a study,
publish results, and make rule recommendations, or make legislative
recommendations if there is some lacuna in the SEC’s
authority.

Primary Sources
U.S. House Financial Services Committee Hearing:
Oversight of the U.S. Securities and Exchange Commission – Wall
Street’s Cop Is Finally Back on the Beat

U.S. House Financial Services Committee Majority
Staff Memorandum: Oversight of the U.S. Securities and Exchange
Commission – Wall Street’s Cop Is Finally Back on the
Beat

H.R. ___

H.R. ____, the “Investor Justice Act of
2021″

H.R. ___

H.R. 2620, the “Investor Choice Act of
2021″

H.R. ____, the “‘Whistleblower Protection
Reform Act”

H.R. ____

H.R. ____, the “Empowering States to Protect
Seniors from Bad Actors Act”

Congressional Testimony, Gary Gensler: Oversight
of the U.S. Securities and Exchange Commission – Wall Street’s
Cop Is Finally Back on the Beat

CII Comment Letter: Chairwoman and Ranking Member
of Committee on Financial Services

NFTs – Collectibles Or Not? Withers LLP

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