WASHINGTON, D.C.—Stephen Hall, Better Markets’ Legal Director and Securities Specialist, issued the following statement in connection with today’s filing of an amicus curiae brief with the U.S. Court of Appeals for the Fifth Circuit in Chamber of Commerce v. SEC:
“The SEC’s rule is classic, bread and butter disclosure regulation that will benefit investors, but it doesn’t sit well with many corporate managers who prefer less transparency. In May, the SEC adopted a rule requiring public companies to provide investors with important information about a company’s repurchase of its stock. Stock buybacks have grown substantially in recent years, and investors are entitled to know when and why management is engaging in these transactions. It’s especially important for investors to know whether executives are involved in self-serving trading to boost their compensation or actually looking out for the best interests of the company and its shareholders. Despite the importance of this information to investors, industry challenged the rule on the grounds that it violates the First Amendment and that the Commission failed to conduct what is in reality an impossible economic analysis.
“As our amicus brief establishes, these attacks are baseless. For example, as detailed in the brief, the Supreme Court has said repeatedly that the government may regulate the exchange of information about securities without offending the First Amendment limits on compelled speech. A ruling to the contrary would jeopardize the SEC’s ability to require disclosures about all sorts of information that investors need to reduce the asymmetries between them and corporate insiders and to enable them to make informed investment decisions. Such a ruling would imperil the foundation of securities regulation in the United States, which is based on full and fair disclosure to investors.
“Similarly, despite the argument that the Commission had to predict, quantify, and compare all the costs and benefits of the rule, neither the federal securities laws nor the caselaw required the Commission to undertake such a quantitative cost-benefit analysis, as we explain in our brief. Instead, the Commission did all that the law requires by considering the impact of the rule on various economic factors, and it properly determined that the rule provided worthwhile benefits to investors despite the acknowledged costs to issuers. A holding that the Commission needed to do more to justify providing investors with material information would again imperil federal securities regulation by saddling the Commission with impossible rulemaking challenges.”
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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 www.bettermarkets.org.
