It’s almost exactly one year to the day since I took Senator Elizabeth Warren to task for what I believed was an unwarranted and particularly vicious attack on the SEC – or, rather, Chair White’s tenure at the SEC. Apparently, Senator Warren decided to celebrate the anniversary with another attack on the SEC and Chair White at a Senate Banking Committee hearing. (You can watch the entire unpleasantness here, including Senator Warren’s refusal to allow Chair White to answer any of her questions before launching another attack.)
This time, the attack was directed to the SEC’s “effective disclosure” project – something that many companies and investors support – claiming that by pursuing this project the SEC is putting companies’ interests ahead of investor protection and demanding that Chair White provide evidence to justify that investors are suffering from information overload. Her comments to Chair White included the following: “Your job is too look out for investors, but you have put the interests of the Chamber of Commerce and their big business members at the top of your priority list.”
Really? Perhaps Ms. Warren should ask some investors to testify. She might learn that many investors do not read disclosure documents, particularly proxy statements (which will soon contain the pay ratio disclosures that she once said should be the SEC’s highest priority), because they are too long and investors just don’t have the time. She might also learn that many investors applaud the SEC’s initiative, because it is designed to enhance some disclosures rather than just eliminate them.
Ms. Warren might also benefit from reading some disclosures herself. Does she think that investors benefit from the “Properties” disclosures in most companies’ 10-Ks? How about the requirement to disclose – under a separate heading, no less – the absence of “compensation committee interlocks” (think “yes, we have no bananas”). The goal of the project is, in part, to eliminate these and other dead wood in the disclosure rules. However, it’s also in part to increase disclosure requirements where warranted.
However, these and other realities apparently do not suit Senator Warren’s purposes, whatever they may be.
I also note that in a recent speech, she excoriated the Senate for not acting on a large number of the administration’s judicial appointments. However, she never mentioned that she and Senator Schumer (among others) recently refused to act on the confirmation of two nominees for the Commission because they declined to commit to adopt a rule requiring disclosure of corporate political contributions. This despite the facts that (1) the SEC’s current budget appropriation prohibits it from acting on this matter and (2) if the nominees had made the commitment she requested, they would likely be required to recuse themselves from any Commission vote on the requirement.
I certainly do not agree with or support everything the SEC does, but in my 40+ years of practicing securities law, I have found the SEC and, particularly, its Staff, to be diligent, serious, hardworking and very smart. In recent years, the SEC and the Staff have also become far more savvy about the realities of the market, and thus striking a better balance between regulation and the need to maintain our capital markets and give companies access to those markets. Senator Warren’s constant diatribes against the SEC for undertaking serious reform efforts will not encourage good people to work there, much less to take on leadership roles. In so doing, I believe she is doing us all a profound disservice.