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March 6, 2024

SEC’s Deficient Climate Rule, Driven by Fear of Biased Kangaroo Courts, Is Bad for Investors, Markets, Financial Stability, and Country

WASHINGTON, D.C.— Dennis Kelleher, Co-founder, President and CEO, issued the following statement in connection with the Securities and Exchange Commission’s (SEC) release of its final climate rule:

“The SEC exists to protect and promote the interests of investors, markets, and capital formation, all of which require the full disclosure of climate related risks just like other risks. The failure to disclose risks, regardless of source, prevents investors from properly evaluating companies, causes those companies and markets to be mispriced, and distorts capital formation and allocation, which harms the economy, jobs, and growth. The predictable, reflexive opposition to that disclosure by the power, money and influence of Wall Street, the financial industry, corporate America, and their many allies doesn’t change those risks or the substantial meritorious basis for requiring their disclosure. However, as happened with the SEC’s recent unwarranted approval of the Bitcoin ETP, the SEC’s action today was driven not by the merits, but by its fear of losing the lawsuit that the industry threatened nonstop and may well file anyway.

“The SEC’s concerns about litigation are well founded. Unfortunately, there are too many judges and too many courts driven by an anti-government ideology and bias that too often ignores the facts, law, policy, and the public interest while delivering victory after victory to industry. The Fifth Circuit Court of Appeals is the worst and is bordering on becoming little more than an industry rubber stamp Kangaroo court. That’s why the financial industry is engaging in legal contortions to bring its cases against the agencies in the Fifth Circuit. This sorry state of affairs has handed the industry a club to beat the agencies with and incentivized the industry to sue regardless of the actual merits.

“This creates a dilemma for the SEC and other regulatory agencies: enact sound, well-reasoned, fully supported, and statutorily grounded rules that the industry will attack in a biased court or enact a weak rule that does something, but not much, while hoping not to get sued. Importantly, this threat of lawsuits isn’t stopping frivolous, baseless, or message rulemakings; it’s stopping agencies from fulfilling their missions and mandates for fear of courts disregarding those missions and mandates and siding with the industry regardless of the merits. This is not just preventing important and necessary rules to protect investors and markets, but it is also undermining the rule of law and respect for the law, courts, and judges.

“To be clear, even this rule has some important provisions, including requiring disclosures about the climate-related risks that are material to a company’s business strategy, results of operations, or financial condition; disclosures about a company’s activities to mitigate or adapt to a material climate-related risk, including a transition plan; and disclosures about the financial statement effects of severe weather events, including costs and losses. However, as Commissioner Crenshaw said, these are the ‘bare minimum’ and ‘better for investors than no rule at all.’

“That simply cannot be the standard. If financial regulatory agencies give the industry most of what it wants in the rulemaking process for fear of biased courts ruling against them in the inevitable lawsuit, they might as well hand over the rule writing pen to the industry from the start and get it over with. No need to go through the charade. That’s not to say that the SEC or others should enact rules that won’t withstand legitimate judicial scrutiny; they should continue to follow the law, as they have always done, and as they did in the much, much stronger proposed rule. They should not, however, let the lowest common denominator of an increasingly lawless Fifth Circuit Court be the standard for evaluating litigation risk and gutting rules in an attempt to appease the unappeasable.”

For additional background, see our comment letter and recent fact sheet.


Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit

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