Remarks Before the Small Business Capital Formation Advisory Committee

Thank you, Carla, and my thanks to all of the members of the Small Business Capital Formation Advisory Committee. I also want to welcome Donnel Baird to the committee and extend my gratitude to Poorvi Patodia, who recently completed her service with this group.

As is customary, I’d like to note that I’m not speaking on behalf of the Commission or the SEC staff.

I often have spoken to this committee about my father, Sam Gensler. With nothing more than a high-school education and mustering-out pay from serving in World War II, he started a small business repairing vending machines. Tomorrow would have been his 100^th birthday.

I have been thinking recently about the world my father grew up in. In the roaring ’20s, investing boomed, new industries rose, yet investor protections at best were piecemeal. Over time, as my father matured, our markets matured as well, thanks to the work this agency does to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation for all businesses—including small businesses like the one he ran and the ones you represent today.

As our technologies and markets continue to evolve, it is through our time-tested securities laws that we can offer a steadying hand to investors and businesses of all sizes. It is in this context that I want to thank you for using today’s agenda to address two recently-proposed rules, on climate-related disclosures and Special Purpose Acquisition Companies (SPACs).

Let me briefly offer certain high-level thoughts on each proposal.

The proposal on climate-related disclosures builds upon this Commission’s long tradition of disclosures.[1] The core bargain from the 1930s is that investors get to decide which risks to take, as long as public companies provide full and fair disclosure of relevant, material information. Over the decades, disclosure needs evolved to include many types of risk factors. Today, one of those risk factors is climate-related risks.

This is a conversation that investors and issuers are having right now. Today, hundreds of issuers are disclosing climate-related information, and investors representing tens of trillions of dollars are making decisions based on that climate-related information.[2]

However, without clear rules of the road, different companies are disclosing different amounts of information, in different places, and at different times. That’s why I believe this proposal, in line with our disclosure-based and not merit-based regime, would help ensure that investors receive consistent, comparable, and decision-useful information, and that issuers have clear and consistent reporting obligations.[3]

This proposal also would include certain exemptions and phase-ins for small filers, particularly around which types of emissions-related information those smaller files would need to disclose. We welcome your feedback on every dimension of the proposal.

Today’s agenda also includes the SEC’s proposal on SPACs. SPACs, as you know, go public in two stages—I call them the “SPAC blank-check IPO” followed by the “SPAC target IPO.” Each stage offers an alternative path from traditional IPOs for companies to raise capital from the public.

Yet, currently, these paths don’t offer the same protections and obligations associated with the traditional IPO process. That’s why the SEC’s recent proposal would strengthen the disclosures, marketing practices, and gatekeeper and issuer obligations for SPACs. This consistency can advance our three-part mission.[4] No matter how an issuer, big or small, raises capital from the public—and no matter how an investor, big or small, makes decisions about that investment opportunity—it is best for everyone to follow the same rules, treating like cases alike.

We’ve already gotten a lot of feedback on both of these rules—some comments for, some against. Either way, we need to hear your thoughts, including in response to what you hear shortly from the SEC’s Division of Corporation Finance and the several guest speakers here with us today. So please, weigh in, in this committee and in your own capacity as investors and as issuers.

Thank you, and I look forward to the readouts from today’s discussions.