On March 11, Acting Director of the SEC Division of Corporation Finance, John Coates, published a statement in connection with remarks he delivered at the 33rd Annual Tulane Corporate Law Institute, noting how important ESG issues have become to investors, public companies and capital markets, while at the same time acknowledging that Women, Influence & Power in Law UK Awards honors women lawyers who have made a remarkable difference in the legal profession. We will also need to be open to and supportive of innovation in both institutions and policies on the content, format and process for developing ESG disclosures. To be sure, some elements of the SECs regulatory regime reflect a recognition that small or new public companies may not be as able to shoulder the costs of all disclosure requirements as older, larger companies. The proposed rule would not require national banks to consider climate-risks in lending activitiesthat is for banking regulators. [3] E.g., Andrew Ross Sorkin et al., What a SPAC Believer Thinks of SPAC Mania, N.Y. Times (Mar. Does that provide de-SPAC participants with protections in private litigation that are not available in a conventional IPO? Dec. 21, 1995) (statement of Sen. Diane Feinstein, The provisions [of the PSLRA] are only available to companies with an established track record. and I understand the safe harbor does not apply to a new company, but only applies to seasoned issuers.). As such, there is no one set of metrics that properly covers all ESG issues for all companies. MD&A: The 12-month period ended June 30, 2022, represents the first period in which companies were required to comply with the amended MD&A disclosure requirements adopted by the SEC in November 2020. But the proposing release goes beyond the numerous supportive investor comments in the March comment file to note at length many kinds of additional evidence showing ways in which more, more comparable, and more reliable information would protect investors by improving their ability to assess and price climate-related financial risks and opportunities, both at the time of initial stock investments and in secondary market trading. Despite this clear authority, critics argue the Commission lacks authority to move forward with the proposal. Its greenhouse gas emission disclosure elements are aligned with the EPAs existing requirements for US emission sources, which in turn are aligned with the widely used and privately developed Greenhouse Gas Protocol, which was a joint product of companies, investors and other organizations. They argue that because the fictional new rule requires disclosure of environmental impact, the Commissions authority was silently removed when Congress authorized the Environmental Protection Agency (EPA) to address that impact. The economic essence of an initial public offering is the introduction of a new company to the public. John Coates does not need much of an introduction. Some claim the Commission has acknowledged or adopted limits on its disclosure authorities, beyond limits in the text of the statutes. The information, including financial statements, relevant to evaluating the investment changes dramatically in the de-SPAC because the private target has operations unlike the SPAC; and initial SPAC investors commonly have the right to and do sell or have their shares redeemed. From a legal authority point of view, company- and investor-based calibration is in keeping with the Commission focusing on investors, rather than on environmental priorities. Credit quality of loan portfolios requires expertise to understand in detail, which is typically found in bank regulatory agencies. What disclosures do investors need to make informed investment and voting decisions? (Sept. 30, 2020). Coates was angry because he believed Wylie was behind moves to unseat him at the then upcoming AOC election - an allegation Wylie denied. The proposed rule specifies the details of disclosure, just as Congress directed the Commission to do. The World Meteorological Organization has tracked damage from weather events for the past fifty years; the top five most economically destructive events all occurred since 2005. 2634.101-805 (see Subparts A-H) Financial disclosure reports are used to identify potential or actual conflicts of interest. 2021 Financial Disclosure Statements. Rather, they are faced with numerous, conflicting and frequently redundant requests for different information about the same topics. [4] With the unprecedented surge has come unprecedented scrutiny, and new issues with both standard and innovative SPAC structures keep surfacing. Chevron plans $2.75 billion in carbon-reduction projects, renewables and offset projects. Banks and insurance companies are increasingly demanding similar information to make loans or underwrite policies. In contrast to the specific mentions of these other federal agencies, the authorizing document, Reorganization Plan No. Thousands more have been filed since the release was proposed, including many from self-identified individual investors. Aircraft manufacturers essentially have their own specialized program accounting, due to the unusually long and complex capital investment process they follow. It is also not a rule the EPA or any other regulatory agency has adopted or could legally adopt. They will continue to be vigilant about SPAC and private target disclosure so that the public can make informed investment and voting decisions about these transactions. Liability risk is an important feature of the conventional IPO process. This is perfect for attorneys licensed in multiple jurisdictions or for attorneys that have fulfilled their CLE requirement but need to access resourceful information for their practice areas. Companies could comply with the rule and say: No debate over the level of risk created by climate change is predetermined or purported to be resolved by the rule. They require fact-finding and expert factual judgments about likely effects, costs, benefits and risks of alternatives, including inaction, in the face of investor needs that have led most large companies to publish inconsistent and variable climate-related disclosures. Asbestos-related disclosure is a great example. No court has ever found that this long line of exercises of the basic authorities on which the current rule relies were beyond the Commissions authority. 2007) (enjoining a merger because the proxy statement omitted the projections used to render the fairness opinion). Jones is a member of the American Law Institute and has served as the Co-Chair of the Securities Law Committee of the Boston Bar Association. Simply put, any such asserted difference seems uncertain at best. He observed first-hand the powerful emotions driving traders. VIA EMAIL: coatesjo@sec.gov John Coates, Acting Director Division of Corporation Finance U.S. Securities and Exchange Commission 100 F Street NE Washington, DC 20549 April 14, 2021 Re: Guidance Needed to Issuers on the Presentation of Shareholder Proposals Dear Director Coates: I am writing to urge the Division of Corporation Finance to issue Even if the safe harbor clearly applies, its procedural and substantive provisions do not protect against false or misleading statements made with actual knowledge that the statement was false or misleading. This demonstrates that the broader direction was consciously added during the legislative process. JOHN COATES, HARVARD LAW SCHOOL: Okay, thank you. The Commission has authority over disclosure about all activities of a consolidated multinational if it is a US public company, including the 40+% or more of those activities that are located outside the US, as noted above. . What is the upshot of this? Companies either do or do not have property, plant and equipment in flood plains. John C. Coates - Harvard Law School License our industry-leading legal content to extend your thought leadership and build your brand. As a result, Congress, markets, analysts, and the SEC staff typically treat these introductions differently from other kinds of capital raising transactions. . PDF ISSN 1936-5349 (print) HARVARD - Harvard Law School He joined his billionaire sister and co-CEO, Denise, in 2001 to launch Bet365 after she . Second, forward-looking information can of course be valuable. Changes came as part of an omnibus criminal law Session Law 2021-138, Part XXI. Congress provided a safe harbor for forward-looking statements made by established, publicly traded, reporting companies. The statute refers to the Commissions rules defining blank check company and to the Exchange Acts definition of penny stock.[15], By contrast, however, the PSLRAs exclusion for initial public offering does not refer to any definition of initial public offering. No definition can be found in the PSLRA, nor (for purposes of the PSLRA) in any SEC rule. Financial Disclosure - United States Department of Justice Bare claims that a later-in-time-statute addressing a different agency and a different set of legislative purposes are ever viewed by courts as silently trumping earlier statutes if their content overlaps in any way, or if the later one is in some way more specific than the earlier one, are wrong as a matter of law. A movement is afoot to impose cost-benefit analysis (CBA) on financial regulation (CBA/FR). In Delaware, as under SEC Rule 405, control can be found to exist raising the corporate law standard in state court review of conflict of interest transactions where a shareholder owns less than 50% of the stock, but exercises control over the business affairs of the corporation. 28, 2018) (refusing to dismiss claim that Musk controlled Tesla despite owning only 22% of the voting power due to actual domination and control). But that, too, is uncertain at best. De-SPAC transactions also may give rise to liability under state law. Just as artificial manipulation tends to upset the true function of an open market, so the hiding and secreting of important information obstructs the operation of the markets as indices of real valueThe disclosure of information materially important to investors may not instantaneously be reflected in market value, but despite the intricacies of securities values truth does find relatively quick acceptance on the market. E.g., Jeff Montgomery, SPAC Investor Sues in Chancery Over MultiPlans Stock Drop, Law360 (Mar. Congress could not have predicted the wave of SPACs in which we find ourselves. The Hour Between Dog and Wolf by John Coates: 9780143123408 He also served on the SECs Investor Advisory Committee, for which he chaired the Investor-as-Owner Subcommittee. John Coates, the vice-president of the International Olympic Committee and outgoing president of the Australian National Olympic Committee, said "to a large extent" that Sydney was awarded the . The fact-finding for this rule, and the financial and accounting expertise on which it is based, is in keeping with the long tradition in which the Commission and its staff have applied expert knowledge about general risk/return, accrual and related concepts to an array of different source of risk and potential liability. 14, 2014) (setting forth special procedures required in mergers involving control shareholders, without which heightened entire fairness must be shown by interested fiduciaries); Olenik v. Lodzinski, 208 A.3d 704 (Del. 6LinkedIn 8 Email Updates. 12 January, 2022 By John Coates John Coates, interim chief executive of Local Authority Recycling Advisory Committee (LARAC), looks at the development of the sector in 2022 This area is reserved. I think it is only about 30 pages, while the British Companies Act is over 300 pages. Section 13(a)(2) of the 1934 Act goes further still, and requires companies to disclose, under rules the Commission: may prescribe as necessary or appropriate for the proper protection of investors and to insure fair dealing in the security such annual reports and such quarterly reports as the Commission may prescribe.
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