What Would a Democratic Victory in November Mean for the SEC? Dissenting Commissioner Statements Offer Glimpse into Potential Priorities

August 31, 2020

The upcoming presidential election could effectively transfer control of the SEC to the Democratic party, meaning that views currently held by a minority of the SEC’s five Commissioners could soon gain majority status. Statements issued by Democratic Commissioners Allison Herren Lee and Caroline Crenshaw dissenting against recent SEC rule amendments offer a glimpse into the potential priorities of a Democratic-led SEC.

In her statement dissenting against the SEC’s amendments to Items 101, 103 and 105 of Regulation S-K (discussed elsewhere in this edition of The Ticker), Commissioner Lee objects to what she calls the “particularly ill-advised omissions of diversity and climate risk.” In her dissent, Commissioner Crenshaw states, “though the Commission has taken a step in the right direction by adding a reference in the final rule to human capital, I worry that the policy choice to impose a generic and vague principles-based requirement will fail to give American investors the information they need.”

Taken together, the two statements signal a concern that the SEC is leaning too heavily on principles-based disclosure and a preference for line-item disclosure, particularly in the areas of diversity, climate risk and human capital.

None of this is to say that a Democratic victory in November would immediately result in SEC rulemaking in furtherance of these agenda items. As explained in this Reuters article, “the SEC is led by a bipartisan commission that includes a chair, two Democrats and two Republicans. While the White House nominates commissioners, they must be confirmed by the Senate, a process that can take months.”

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