The annual “SEC Speaks” event provides insights into the priorities of the Securities and Exchange Commission (SEC) for the coming year. The event, sponsored by the Practicing Law Institute, serves as a platform for the SEC to communicate guidance on rules, regulations, enforcement actions, and lawsuits. This year, SEC Chair Gary Gensler emphasized the importance of disclosure in maintaining trust, efficiency, competition, and liquidity in the markets. Key issues on the agenda include shortening the securities settlement cycle, expanding the definition of exchanges, reconsidering quoting stock trades in sub-penny increments, establishing a best execution standard for broker-dealers, and enhancing competition for individual investors’ orders.
The SEC’s mission is to protect investors, ensure fair and efficient markets, and facilitate capital formation. Originating in response to the 1929 stock market crash and subsequent Great Depression, the SEC enforces regulations to prevent fraudulent securities sales through disclosure requirements. The Securities Act of 1933 and the Securities Exchange Act of 1934 were enacted to enforce registration and disclosure practices within the securities industry. Legislation such as the Investment Company Act of 1940 and Investment Advisers Act of 1940 further regulated mutual funds, ETFs, and investment advisers.
The SEC’s agenda at the “SEC Speaks” event covers areas of risk monitoring, disclosure, and enforcement. The economic and risk analysis division monitors risks to investors, while the division of corporation finance ensures Corporate America maintains material disclosures. The division of examinations conducts national examinations to ensure compliance with disclosure requirements on topics like cybersecurity, crypto, and climate change. The division of enforcement investigates securities laws violations and prosecutes civil suits, playing a vital role in maintaining market integrity.
The event also features discussions on mutual funds, ETFs, and investment advisers, regulated by the Investment Company Act of 1940 and Investment Advisers Act of 1940. The division of investment management oversees investment companies and advisers, sharing insights on new disclosure requirements. The division of trading and markets monitors trading entities like broker-dealers, stock exchanges, and clearing agencies, providing updates on record-keeping requirements, trading cycle shortening, and short sale disclosure.
The recent rule changes around SPACs, or special purpose acquisition companies, highlight the SEC’s focus on disclosure. Executive claims about future profitability in SPAC mergers are now subject to stricter disclosure rules, ensuring target companies are legally liable for forward-looking statements. SPACs no longer have the same legal protections for forward-looking statements as traditional IPOs, making them more susceptible to legal challenges. While former President Donald Trump’s involvement in a SPAC merger served as an example of the impact of these rule changes, the emphasis on transparent disclosure will likely remain a key theme at the “SEC Speaks” event.
