The SEC announced that Acting Chair Roisman will be replaced as acting chair by Commissioner Lee now that President Biden has taken office.
The SEC announced that Commissioner Allison Herren Lee is the SEC’s new acting chair, replacing Acting Chair Elad Roisman, whom former President Trump had designated for that role after SEC Chair Jay Clayton left the Commission in December 2020. Roisman served as acting chair for just under a month and can remain a commissioner until his term expires in June 2023. Lee was sworn in as a commissioner in July 2019, and her term expires in June 2022.
Lee could serve for several months. The possibility that Lee would become acting chair upon Joe Biden’s being sworn in as president had appeared more likely in recent weeks after Lee’s husband, PCAOB member J. Robert Brown, announced he would soon leave the PCAOB. Lee will likely cede the chair role when President Biden’s nominee to be permanent chair, Gary Gensler, is confirmed by the Senate. If history is a guide, however, Gensler may not be confirmed for up several months as the evenly split Senate tries to agree on a power-sharing arrangement, conduct Trump’s second impeachment trial, advance an expected Biden Administration COVID-19 aid package, all while other Biden Administration financial regulator nominations could get backlogged in the Senate Banking Committee.
"I have tremendous respect for my colleagues on the Commission and the exceptional staff across the agency, and look forward to working closely with them," said Lee in a press release. "Together we will continue the agency’s work of protecting investors and ensuring market integrity."
Roisman and Commissioners Hester Peirce and Caroline Crenshaw wished Lee well in her new role as acting chair, as Lee had done in joining Peirce and Crenshaw to congratulate Roisman on his designation as acting chair in December.
ESG disclosures. The SEC’s press release announcing Lee’s new role noted that she has been an advocate for more fulsome environmental disclosures by public companies. She also has clashed with Peirce during a rulemaking colloquy over the question of whether SEC regulations should move in the direction of more prescriptive disclosures or more principles-based disclosures, with Lee backing a mix of the two types of disclosures and Peirce backing principles-based disclosures.
Lee has generally advocated more ESG disclosures across a range of topics, including, for example, diversity and inclusion and climate change. With respect to climate change, Lee has expressed concerns about the U.S. lagging behind other countries regarding climate guidance, has suggested that the MD&A is a good locus for climate disclosures, and has sought more standardized climate metrics, as shown by a sampling of her speeches and public statements:
- Allison Herren Lee, Statement at Inaugural Meeting of the Asset Management Advisory Committee, January 14, 2020 (SEC climate guidance aging and U.S. risks falling behind other countries).
- Allison Herren Lee, "Modernizing" Regulation S-K: Ignoring the Elephant in the Room, January 30, 2020 ("MD&A is uniquely suited to disclosures related to climate risk").
- Allison Herren Lee, Regulation S-K and ESG Disclosures: An Unsustainable Silence, August 26, 2020 ("This year’s upheavals have driven home that ESG risks, like those associated with diversity and climate change, are strong predictors for resilience and for maximizing risk-adjusted returns" (footnotes omitted)).
- Allison Herren Lee, Playing the Long Game: The Intersection of Climate Change Risk and Financial Regulation, November 5, 2020 ("The SEC should work with market participants toward a disclosure regime specifically tailored to ensure that financial institutions produce standardized, comparable, and reliable disclosure of their exposure to climate risks, including not just direct, but also indirect, greenhouse gas emissions associated with the financing they provide …").
- Allison Herren Lee and Caroline Crenshaw, Joint Statement on Amendments to Regulation S-K: Management’s Discussion and Analysis, Selected Financial Data, and Supplementary Financial Information, November 19, 2020 (expressing disappointment over revised MD&A disclosure but stating: "We have an opportunity going forward to address climate, human capital, and other ESG risks, in a comprehensive fashion with new rulemaking specific to these topics.").
The Biden Administration has already signaled its interest in pursuing an all-of-government effort to combat climate change, and it seems likely the SEC’s disclosure regime will play some, as yet to be determined, role in that effort. If Lee remains on the Commission until the end of her term, or if she is nominated for a second term, she could contribute significantly to whatever path the Commission ultimately takes on climate change and other ESG disclosure issues. However, the acting chair role Lee now occupies typically is temporary in duration and generally is not prone to significant rulemaking because major policy decisions are expected to be made by the next permanent SEC chair.
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