SEC Agenda Eyes Index Providers; Fund Liquidity and Dilution; Money Funds

The SEC released its regulatory agenda, which revisits proxy voting advice rules and includes notable areas such as ESG, corporate disclosures regarding human capital, cybersecurity risk governance, and climate risks. The agenda also includes items from the IM Division and Trading and Markets, including:

• IM Division may recommend that the SEC seek public comment on the role of certain third-party service providers, such as index providers and model providers, and the implications for asset management industry.
• IM Division may recommend reforms relating to the regulation of money market funds.
• IM Division may recommend that the SEC propose changes to regulatory requirements relating to open-end fund’s liquidity and dilution management.  
• Trading and Markets may consider changes to short selling disclosures and possible regulation around loans and borrowing of securities.

In a statement, commissioners Hester Peirce and Elad Roisman said the agenda makes clear that Chairman Gary Gensler’s recent directive to SEC staff to consider revisiting recent regulatory actions taken with respect to proxy voting advice businesses “was not an isolated event, but just the opening salvo in an effort to reverse course on a series of recently completed rulemakings.” The two commissioners pointed out that the agenda lacked important potential rulemakings, “including rules to provide clarity for digital assets, allow companies to compensate gig workers with equity, and revisit proxy plumbing.” Meanwhile, Chairman Gensler restated his desire for money market reforms and a workable LIBOR replacement in statements at an FSOC meeting. Separately, the SEC appointed a new director for its Corporate Finance Division. Renee Jones, a professor at Boston College School of Law, has written critically about “unicorn” companies, which are valued at over $1 billion before going public, the Wall Street Journal reported.