In the wake of the midterm elections, we at Cooley were talking yesterday about what it all might mean – and we came up with these ten questions for you to consider:
General Trend Impacts:
- Will proxy advisors and institutional investors change their policy and stewardship approach, particularly now that proxy advisory legislation is likely off the table? Will proxy advisors still face the level of regulatory scrutiny they have been facing?
- Will the balance of power between shareholders and boards shift? Could there be a change in the debate over shareholder proposals, proxy access, shareholder engagement and the rights of institutional investors?
- Does the change for the governing regime in Texas impact the movement of companies to incorporate in Texas?
- Many companies pulled back on DEI programs and disclosure in response to Administration pressure. Will those companies now face congressional scrutiny or otherwise feel pressure to reverse course?
- What is the future of ESG-related disclosure and governance? What is the impact on climate disclosure and the ability of investors to seek information about environmental and social issues?
SEC and Other Regulatory Consequences: - Will the election results change the SEC’s regulatory priorities, including the disclosure reform agenda? What might be the impact on the SEC’s many initiatives including semiannual reporting, quarterly earnings disclosures, executive compensation, shareholder proposals and modernization of Regulation S-K? Even if SEC leadership remains unchanged, could a shift in Congressional control influence which rulemaking initiatives move forward, slow down or get abandoned?
- Will the SEC’s enforcement priorities change? Could there be a change on the agency’s emphasis on disclosure violations, accounting fraud, insider trading, cybersecurity, cryptocurrency and corporate governance misconduct?
- How might the elections affect the SEC’s budget and staffing? Could Congressional appropriations, oversight hearings and staffing constraints influence the agency’s ability to conduct examinations, pursue enforcement actions and adopt new rules?
- What happens to the SEC’s efforts to encourage capital formation? Could Congressional changes affect IPO reform, private offering exemptions, accredited investor standards and initiatives intended to make public company status more attractive?
- Will cryptocurrency and tokenization face a different political environment? How might the new Congress approach digital asset market structure, tokenized securities, investor protections and the division of regulatory authority between the SEC and CFTC?
Authored by
Broc Romanek