Chair Gensler and Commissioner Peirce Disagree on Burden of Disclosure Regulation

In remarks at the SEC's Small Business Capital Formation Advisory Committee Meeting, Chair Gary Gensler and Commissioner Hester M. Peirce offered opposing viewpoints on the agency's current approach to disclosure regulation, particularly as to the climate-related risk proposal and special purpose acquisition company ("SPAC") proposal.

Chair Gary Gensler

Mr. Gensler supported the two proposed rules, arguing the need for "clear rules of the road" to (i) help standardize regulations, (ii) better protect investors, (iii) maintain fair, orderly and efficient markets and (iv) facilitate capital formation for businesses of all sizes. Mr. Gensler stated that the proposed climate-related risk disclosures are consistent with the SEC's tradition, saying that "disclosure needs evolved to include many types of risk factors" and that today, climate-related risk is one of those risk factors. He noted that many companies already disclose climate-related risks, but urged the SEC to standardize the requirements.

Additionally, Mr. Gensler argued for the need to regulate the disclosures for SPACs, stating that "SPACs do not offer the same protections to investors compared to the traditional IPO process."

Commissioner Hester M. Peirce

Ms. Peirce disagreed with both proposals, raising concerns over the disproportionate impact these rules would have on small businesses. Specifically, Ms. Peirce stated the climate rulemaking would "vastly expand" disclosure and compliance requirements for all public companies. On the SPAC proposal, Ms. Peirce expressed concern that it would require "significant changes to the operations, economics, and timeline of SPACs" and might also have unintended consequences not yet considered.