Middle-Market Public Policy Roundup
The SEC’s Investor Advisory Committee discussed ESG data and the accredited investor definition, and the NLRB's chairman responded to congressional criticism about the joint-employer standard.
With contributions by Maria Wolvin and Ben Marsico.
In this week’s roundup, we look at a recent meeting of the Securities and Exchange Commission’s Investor Advisory Committee to discuss and debate the use of ESG data and the definition of an accredited investor. Meanwhile, the chairman of the National Labor Relations Board responded to a senator’s criticism about the agency’s rulemaking effort regarding the joint-employer standard.
SEC Committee Examines ESG Data and Accredited Investor Definition
Last week, the Securities and Exchange Commission’s Investor Advisory Committee held a meeting to discuss the use of environmental, social and governance—or ESG—data by investors, as well as the SEC’s Concept Release on Harmonization of Securities Offering Exemptions.
Although SEC Chairman Jay Clayton was unable to attend the meeting, he issued public remarks expressing his interest in how ESG items are used by investors and reiterated his focus on a disclosure framework centered around material, principles-based information. “This framework … has served investors and our capital markets well for the better part of a century,” he said.
Clayton also showed interest in hearing the IAC’s thoughts on the SEC’s recent Concept Release on the Harmonization of Securities Offering Exemptions, as well as suggestions for future topics the committee should discuss, most of which centered on retail investor protection.
The meeting featured two panel sessions. The first focused on whether mandated disclosure of ESG data for public securities would benefit investors. Panelists discussed issues with the current voluntary reporting regime, including the problem of self-selected metrics, which make it hard to compare companies that use different reporting standards. Some members of the committee pushed back against the suggestion that mandated disclosures would improve the situation, pointing out that the “materiality” of ESG disclosures is hard to quantify, and that it should not be the SEC’s job to evaluate it.
The second panel discussed the definition of an “accredited investor” and the current regulatory regime for crowdfunding. Jennifer Zepralka, chief of the Office of Small Business Policy at the SEC, said one of the most common issues highlighted in comment letters responding to the concept release involved the accredited investor definition.
Panelists echoed the current debate surrounding private markets exemptions, with some calling the current patchwork confusing, burdensome and in need of streamlining. Others argued so-called “mom and pop” investors lack the negotiating leverage, time and sophistication to take part in private offerings, and said reducing private reporting requirements comes at the expense of weakening the incentive of companies to go public.
NLRB Responds to Joint Employer Criticism
On Friday, the head of the National Labor Relations Board responded to criticism from the ranking member of the Senate Committee on Health, Education, Labor, and Pensions about the agency’s joint-employer rulemaking.
In a letter dated Nov. 8, NLRB Chairman John Ring addressed concerns from Sen. Patty Murray, D-Wash., about the board’s rulemaking agenda.
Murray requested information on the rulemaking in correspondence submitted on Oct. 24. In it, the senator asked Ring to explain why the NLRB decided to engage in rulemaking on the joint-employer standard.
According to Murray, the NLRB had previously set policy on a case-by-case basis to resolve disputes between conflicting parties or in response to new legislation. Recently, however, the senator said the agency has broken with its traditional adjudication role.
“Never before has the NLRB used rulemaking to address issues with this level of specificity,” she said, calling into question the agency’s impartiality.
Ring admitted the NLRB has engaged in more rulemaking than in previous administrations but disagreed with Murray’s assessment that the agency has never acted with such specificity. Ring cited a 2011 instance of rulemaking that required employers to post an employee rights notice, which he said would have imposed a “very specific duty.”
“The level of specificity in the subject addressed in a rulemaking is immaterial,” Ring said.
Citing news reports, Murray attributed the lack of joint-employer cases to the perception of unions and workers that the NLRB would not fairly assess their disputes .
Ring countered by saying some groups may choose not to bring cases out of concern that an impartial assessment might not rule in their favor. “I cannot control parties’ decisions about whether to pursue a case before the Board or how parties may perceive the merits of their particular matter,” he said.
Murray also raised concerns about the thoroughness of the NLRB’s rulemaking process and questioned whether the agency was considering all interested parties. Ring said the agency received 29,000 comments for the rulemaking and extended the comment period by 76 days to ensure the maximum number of respondents had an opportunity to participate.
Although the NLRB chairman disagreed with Murray’s comments, Ring said the agency is preparing the information the senator requested.
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Benjamin Glick is ACG Global’s marketing and communications associate.
