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ASA Highlights Negative Consequences of SEC Climate Rule to House Financial Services Committee



WASHINGTON, D.C. – The American Securities Association (ASA), in advance of today’s U.S. House Committee on Financial Services Oversight and Investigations Subcommittee hearing, sent a letter to Subcommittee Chairman Bill Huizenga (R-MI) and Ranking Member Al Green (D-TX) highlighting the consequences and negative impacts of the U.S. Securities and Exchange Commission’s (SEC) Enhancement and Standardization of Climate-Related Disclosures for Investors Proposal.

 

“No segment of our society has benefited more from the SEC’s rulemaking agenda than the professional class of lawyers, auditors, compliance consultants, and investor ‘activists’. To illustrate this point, Bloomberg estimates this politically connected Wall Street professional class could reap government directed profits of up to $18.4 billion from the climate rule alone,” said Christopher Iacovella, President & CEO of the American Securities Association. “Congress needs to end this administrative ‘lawmaking’ to prevent the SEC from redirecting money from those investors who have saved and risk their capital to those in the professional class who do not. It must use every means necessary, to send a message to unelected bureaucrats that it, not the SEC, decides what policies govern the American people.”

 

In the letter to the Subcommittee, ASA outlined numerous concerns associated with the Proposal and made specific comments in the letter which are highlighted below:

 

I. Cost of the Rule. By even the most conservative estimates, the climate rule will impose over $6 billion in direct compliance costs for year, which would more than double the annual compliance costs for public reporting companies of every size. In other words, this one rule would cost America’s investors exponentially more than every other SEC disclosure rule combined.

 

II. SEC Hypocrisy on Disclosure. This SEC has also exercised a demonstrably hypocritical approach to investor disclosure. In certain cases (e.g. the climate rule), the SEC is happy to impose a costly billion-dollar major rule on the economy to placate the demands of politically connected investors. In other cases (e.g. the SEC’s “predictive data analytics” rule), the SEC argues that providing disclosures to non-politically connected investors is insufficient to achieve its regulatory objectives. The only common theme between these two approaches is that they both, unsurprisingly, would permit the SEC to grant itself an incredible amount of new authority.

 

III. Who Benefits? While the benefits of the SEC’s agenda to the professional class are clear, what’s less obvious is how these rulemakings will benefit actual investors, especially those in the working and middle class who depend on financial returns to fund retirement, higher education, or to pay bills. To date, the SEC has not conducted any analysis of its agenda to answer that question.

 

IV. This SEC is Acting Against the Will of Congress. This Chair is acting outside the scope of his legal authority because Congress explicitly failed to act to give him the authority to enact a climate disclosure rule. The SEC’s adoption of this policy would be in direct contravention of the will of Congress and the will and consent of the American people.

 

Read the letter to the House Financial Services Subcommittee on Oversight & Investigations here.

 

In June 2022, ASA submitted a comment letter to the SEC urging the Commission to withdraw its Proposal and refrain from fundamentally transforming the securities laws in this way without express Congressional authorization.

 

 

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About the American Securities Association

 

American Securities Association, based in Washington, DC, represents the retail and institutional capital markets interests of regional financial services firms who provide Main Street businesses with access to capital and advise hardworking Americans how to create and preserve wealth. ASA’s mission is to promote trust and confidence among investors, facilitate capital formation, and support efficient and competitively balanced capital markets. This mission advances financial independence, stimulates job creation, and increases prosperity. The ASA has a geographically diverse membership of almost one hundred members that spans the Heartland, Southwest, Southeast, Atlantic, and Pacific Northwest regions of the United States.

 

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