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Volume XI, Number 217

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SEC Releases Spring 2021 Regulatory Agenda, What Made The Cut?

Last week, the Securities and Exchange Commission’s Office of Information and Regulatory Affairs released the Spring 2021 Unified Agenda of Regulatory and Deregulatory Actions, which includes the SEC’s rulemaking agenda.

According to the SEC’s press release, notable proposed and final rulemaking areas include:

  • Disclosure relating to climate risk, human capital, including workforce diversity and corporate board diversity, and cybersecurity risk
    Market structure modernization within equity markets, treasury markets, and other fixed income markets

  • Transparency around stock buybacks, short sale disclosure, securities-based swaps ownership, and the stock loan market

  • Investment fund rules, including money market funds, private funds, and ESG funds

  • Unfinished work directed by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, including, among other things, securities-based swaps and related rules, incentive-based compensation arrangements, and conflicts of interest in securitizations

  • Enhancing shareholder democracy

  • Special purpose acquisition companies

  • Mandated electronic filings and transfer agents

  • 10b5-1 affirmative defense provisions

One of the first items to be addressed, by October 2021, is proposed rule amendments to address concerns about Rule 10b5-1’s affirmative defense provision. Rule 10b5-1 provides an affirmative defense to corporate insiders and issuers from insider trading law if they adopt a trading plan in good faith and before they become aware of material nonpublic information. The proposed rulemaking on Rule 10b5-1 follows less than a week after SEC Chairman Gary Gensler gave a speech highlighting his concerns about the use of 10b5-1 trading plans.  In that speech he also noted that he had asked staff to make recommendations “how we might freshen up Rule 10b5-1.”  It is likely that the ideas he raised in his speech, including a mandatory cooling off period before the first transaction, limitations on when 10b5-1 plans can be cancelled, mandatory disclosure of 10b5-1 plans and limits on the number of plans, become part of the rulemaking discussion.  Insiders and issuers should pay close attention to the process because it may lead to changes in 10b5-1 plans beyond what is current practice.  For example, a four to six month cooling off period is longer than what many consider best practice.    

What is also noteworthy is what was not included in the SEC’s release – rulemaking concerning digital assets – which drew the ire of two commissioners and is somewhat surprising given the growth of digital assets.  On June 14, commissioners Hester M. Peirce and Elad L. Roisman issued a statement noting, among other things, the lack of proposed rules regarding digital assets and allowing companies to compensate gig economy workers with equity and also expressed their concern that the SEC was planning to revisit areas that had been the subject of recent rulemaking, such as proxy updates, resource extraction payments, the definition of accredited investor, and whistleblowers.

Although the SEC’s rulemaking agenda may change, this release provides a guide for the SEC’s regulatory initiatives in the near future.  And, it will be interesting to see whether the Commissioners Peirce and Roisman and able to garner support to address digital assets.

©2021 Epstein Becker & Green, P.C. All rights reserved.National Law Review, Volume XI, Number 169
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About this Author

Brian Friedman Litigation Attorney Epstein Becker Green

Brian Friedman is a Member of the Firm in the Litigation & Business Disputes practice, in the New York office of Epstein Becker Green. He has experience representing clients in a variety of industries, including financial services and securities, real estate and construction, retail goods and services, insurance, and health care. A substantial portion of his practice is devoted to representing banks, broker-dealers, futures commission merchants, swap dealers, and other leading financial institutions in litigation and regulatory matters.

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