NASAA President Urges Congress to Be "Skeptical" of Regulatory Liberalization in Response to the Pandemic
Commentary by Steven Lofchie
North American Securities Administrators Association ("NASAA") President Christopher Gerold urged Congress to be "very skeptical" of legislative actions in response to COVID-19 that could weaken securities laws.
Mr. Gerold stated that while additional steps could be taken to protect small businesses affected by COVID-19, there are "principles and priorities" for Congress to consider, so as not to weaken securities laws, such as:
-
increasing transparency in the private marketplace to provide insight into how such markets function during COVID-19;
-
mandating a temporary pause on "major" rulemaking by the SEC, noting that even though the economy has "changed profoundly," the SEC is continuing to pursue certain "deregulatory" rulemaking actions; and
-
protecting public markets by (i) maintaining or expanding public company disclosures and (ii) coordinating efforts with state regulators to prevent fraud within capital markets.
Commentary
The statement by NASAA's President, urging that Congress not permit a reduction in regulatory requirements as a result of the pandemic, and perhaps even add additional restrictions as to private offerings, stands in direct contrast to President Trump's recent Executive Order directing federal agencies to lighten up on regulations that may hinder economic recovery. This disagreement on whether to lighten or toughen regulation in response to current conditions shows no sign of abating. See, e.g., SEC Lessens Disclosures Requirements as to Business Acquisitions and Dispositions (particularly concerning the dissent from Commissioner Lee).