Join Facebook to connect with John Coates and others you may know. The text, the ordinary meaning of its key words (that is, other and information), and their context (the title and relevant headings of the Commissions organic statutes), as analyzed above, are clear as to the Commissions ability to require the proposed disclosures for the protection of investors. New Corp Fin Director John Coates is fully on-board, making speeches and otherwise being vocal in his support of ESG centered disclosures. The legal authorities cited by the Commission in the proposing release are the conventional authorities for disclosure rules over nearly a century. I thank Michael Conley for his service as Acting General Counsel, and I look forward to continuing to work with Michael and John on critical matters before the Commission., I am honored to continue to help advance the SECs mission to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation, said Coates. Harvard Law School Professor John C. Coates spoke at a briefing on Oct. 30 in Washington, D.C., to urge the Securities and Exchange Commission to require publicly traded companies to disclose their political spending. I write to comment on legal authority. These claims raise significant investor protection questions. Companies may chooseas many do nowto go beyond what is required, to convince investors and others that (for example) their strategies are going to succeed. Ch. The ways investors may use the information are not predetermined by the rule, nor would the rule itself limit how companies speak about whether (for example) climate risks are currently being overestimated or producing excessive disinvestment. Not a Bloomberg Law Subscriber?Subscribe Now. In contrast to the specific mentions of these other federal agencies, the authorizing document, Reorganization Plan No. Mar. In sum, the text and context of the 1933 Act itself gives the Commission broad authority to require disclosures about financial risks and opportunities beyond the inevitably incomplete initial lists of information and documents included in the statute. When the only dissenting Commissioners primary basis for dissenting is that the Commission has already addressed the topic in prior rulemakings upheld by courts, courts have no basis for using one discretionary canon to apply personal policy judgments on a topic within the Commissions conventional and textually clear statutory authority. Women, Influence & Power in Law UK Awards honors women lawyers who have made a remarkable difference in the legal profession. The Commission cannot shirk its duty to protect investors even if that duty to an extent overlaps with EPAs duty to protect the environment. Her leadership will be invaluable as the Division facilitates disclosure under our current rules and undertakes rule modernization to meet the challenges of today. SPAC sponsors and targets and their affiliates and advisors should already be providing the public with the information material to the investment opportunities a de-SPAC represents, regardless of how the liability analyses ultimately play out. 2d 613, 629 (S.D.N.Y. There are 300+ professionals named "John Coates", who use LinkedIn to exchange information, ideas, and opportunities. 5 C.F.R. Recognizing innovation in the legal technology sector for working on precedent-setting, game-changing projects and initiatives. Other agencies will need to tackle the many tasks those greater ambitions involve. EPA has authority over private companies, while the Commissions proposed rule covers only public companies. Aircraft manufacturers essentially have their own specialized program accounting, due to the unusually long and complex capital investment process they follow. Instead, the rules limitsto public companies with securities trading in the U.S.again underscore how it is well within the scope of traditional securities law, designed for investor protection, and not for other goals. John Coates, acting director of the SEC's Division of Corporation Finance, similarly stated in a recent speech that the "SEC should help lead the creation of an effective ESG disclosure system so companies can provide investors with information they need in a cost effective manner," noting in particular the task of adapting existing rules and They believe climate risks are minimal for the company, or for the world, for whatever reason, if that is their honest belief. What about the Private Securities Litigation Reform Act? The Ferocious, Well-Heeled - Institutional Investor As we think about structuring a disclosure system for ESG issues, one question that comes up is whether ESG disclosures should be the subject of mandatory versus voluntary disclosure provisions. It has never been EPAs job. Advocates make their voices heard on mandatory climate disclosure 12 January, 2022 By John Coates John Coates, interim chief executive of Local Authority Recycling Advisory Committee (LARAC), looks at the development of the sector in 2022 This area is reserved. (Sept. 30, 2020). The Commissions authority to adopt the actual proposed rule remains intact, and clear. John C. Coates is the John F. Cogan, Jr. But we do have a provision that permits the Commission to set up rules and regulations which will have the effect of law. Getting The Talent Balance Right: From Layoffs to Laterals to Mergers, How Can Firms Staff for Success? 23, 2013) (citing Sawant v. Ramsey, 3:07-CV-980 VLB, 2010 WL 3937403 (D. Conn. Sept. 28, 2010) (holding that otherwise forward-looking statements that contain misrepresentations of current facts are not protected by the safe harbor provision of the PSLRA or the bespeaks caution doctrine); In re Nortel Networks Corp. Sec. If markets are currently overly negative about a companys physical risks (e.g., to floods), such disclosures would facilitate a reduction in that companys cost of capital. Specifically, for the largest companies, the proposed rule would require three types of specific disclosures: Of these, the first and third are inarguably about financial risks and opportunities related to climate change. Surveys of institutional investors published in peer-reviewed financial journals confirm this evidence. These data, again, are thus directly relevant to financial risks and opportunities for public companies. Therefore companies should ensure that any public disclosures of non-GAAP financial measures comply with applicable SEC rules and staff guidance. John Coates Financial Services Professional at NYLIFE Securities LLC Finally, it is beyond argument that the Clean Air Act nowhere mentions the Commission much less modifies its disclosure authority. Read fairly and dispassionatelynon-politically, one might saydisclosures specified by the rule are not about environmental impact, or climate change, but about financial risks and opportunities related to climate change. The secondemissions datais widely used as measures of transition risk, that is, the risk that energy costs and policy responses by other lawmaking bodies (not the Commission) (some of which are already reflected in treaty commitments or other enacted policies of the US and other countries in which US public companies do business) will force companies to expend money to reduce their emissions or mitigate their impacts. The financial disclosure that John Coates filed also offered a rare public peek into the costs of corporate compliance monitors. Investments are being held back in the absence of that information. John Coates does not need much of an introduction. If the person charged with reviewing an employee's report finds a conflict, he should impose a remedy immediately. He chairs the faculty committee on executive education and teaches contracts, corporations, corporate governance and financial regulations. Liability risk is an important feature of the conventional IPO process. 3 of 1970, nowhere mentions the Securities and Exchange Commission. SEC Regulation of ESG Disclosures - The Harvard Law School Forum on They will continue to be vigilant about SPAC and private target disclosure so that the public can make informed investment and voting decisions about these transactions. Acting Corp Fin Director Coates says ESG disclosure requirements 2008) (identifying a breach of fiduciary duties for failure to disclose material facts to stockholders before stockholder vote on merger); City of Fort Myers Gen. Emp.s Pension Fund v. Haley, 235 A.3d 702 (Del. For example, many companies have no major facilities in flood plains, do not consume significant amounts of energy, and do not produce significant greenhouse gas emissions. Duke Energy is investing $52 billion in transitioning to lower carbon resources. In other words, the delegation to the Commission was deliberate, was specifically intended to apply to required disclosures, and was sensible, reflecting an anticipation that the Congress itself could not reasonably work out in detail the kinds of choices necessary to develop and keep up to date an appropriate disclosure regime. The requirements have included disclosures about risks and uncertainties generally, and of information both qualitative (business segments; competitive conditions; management, environmental and other litigation; and contracts) and quantitative (mineral reserve estimates, loan performance statistics, coverage ratios, material transactions, and compensation). 6, 2021) (showing that there have been 26 total liquidations as of Apr. US Steel abandoned plans to expand its Mon Valley Works in Pennsylvania, because it had expanded our understanding of steelmakings future in a rapidly decarbonizing world, resulting in $56 million write-off in 2021. This blog answers some questions about the changes. Those authorities are general in nature, not limited to specific topics. Those involved should be accountable to relevant constituencies, including investors and companies. [9] Indeed, in some ways, liability risks for those involved are higher, not lower, than in conventional IPOs, due in particular to the potential conflicts of interest in the SPAC structure.[10]. Rec. Biography. [2] It permits significant differences in how companies respond to a variety of mandatory requirements, including in many cases disclosing items if and only if they are material. John Coates, the Divisions current Acting Director, has been named SEC General Counsel. Moreover, is it appropriate that the choice of how to go public may determine or be determined by liability rules? A SPAC is a shell company with no operations. What disclosures do investors need to make informed investment and voting decisions? (forthcoming 2021); Minmo Gahng, Jay R. Ritter and Donghang Zhang, SPACs, Working Paper (Mar. With that overview, I would like to focus on legal liability that attaches to disclosures in the de-SPAC transaction. Voluntary, unassured disclosures are more likely to include greenwashing, impairing investors ability to assess and price risk, and undermining honest companies ability to communicate with investors and build confidence; some greenwashing rises to the level of fraud, while other disclosures or omissions may not rise to the level of actionable fraud with proof of scienter. Sydney Olympics 'bought to a large extent' said organiser John Coates So, too, for mining companies, asset-backed issuers, and other sectors, as also detailed in Annex A. With the large pool of private capital available and the increase in Exchange Act Section 12(g) registration thresholds, a company can remain private and grow significantly without going through a traditional IPO. [7] See, e.g., Chris Bryant, Why Chamath Palihapitiya Loves SPACs So Much, Bloomberg Opinion (January 28, 2021) (citing Haystack, Alignment Summit Chats: SPACS (w/ Chamath Palihapitiya), YouTube (Dec. 2, 2020) (statement of Chamath Palihapitiya) (Because the SPAC is a merger of companies, youre all of a sudden allowed to talk about the future.