A while back – March 2017, to be exact – I posted a piece entitled “Beware when the legislature is in session”, citing a 19th Century New York Surrogate’s statement that “no man’s life, liberty or property are safe while the legislature is in session.”
It may be time to amend that statement, for Washington seems to be at it regardless of whether the legislature is in session. A very rough count suggests that there are more than 20 pending bills dealing with securities laws, our capital markets, corporate governance and related matters. And that does not include other initiatives, such as the President’s August 17 tweet that he had directed the SEC to study whether public companies should report their results on a semi-annual, rather than a quarterly, basis.
Problems with the Approach
I’m not saying that all of the ideas being floated are awful, or even bad. (One good thing is that our legislators seem to have decided that trying to give every statute a name that can serve as a nifty acronym isn’t worth the effort.) In fact, some of the ideas merit consideration. However (you knew there would be a “however”), I have problems with the way in which these bills deal with the topics in question. (I have problems with some of the ideas, as well, but more on that later.)
- First, in my experience, far too many legislators do not understand what our securities laws are all about, and some do not want to understand or do not care. I will not cite particular instances of this, but I’ve been surprised several times with the level of ignorance or worse (i.e., cynicism) demonstrated by legislators and their staffs about the matters their proposals address. At the risk of hearing you say “duh”, this does not lead to good legislation.
- Second, these bills represent a slapdash approach when what is needed is a comprehensive, holistic one. Even the best of the pending bills and proposals is a band-aid that will create another complication in an already overcrowded field of increasingly counterintuitive and/or contradictory regulations, interpretations, and court decisions.
Problems with the Proposals
As promised (threatened), I also have concerns about a number of the proposals being bruited about, but for the moment I’ll focus on two of them – eliminating quarterly reporting and Senator Warren’s “Accountable Capitalism Act”.