Insight

Washington Report 360 | May 28, 2021

Attention on IPOs, private funds, and crypto assets; SEC clarified “materiality” misconceptions related to ESG disclosures

Amy S. Matsuo

Amy S. Matsuo

ESG and Regulatory Insights Lead, KPMG LLP

Key Highlights

  • The heads of six large banking institutions provided testimony before the Senate Banking Committee and the House FS Committee; wide-ranging topics raised by Congress included loan modifications/foreclosures, ESG-related commitments (such as funding to CDFIs/MDIs and financing for fossil fuel industries), overdraft protections, financial inclusion, and alternatives to LIBOR.
  • SEC testimony signaled increased regulatory attention to be directed toward IPOs, private funds, and crypto assets due to investor protection concerns and regulatory “gaps”.
  • Ongoing attention to crypto assets seen in joint agency “sprint” (acknowledged in testimony by FRB Governor Quarles) and FRB remarks on CBDCs.
  • In response to questions about “materiality” in the context of ESG disclosure, SEC clarified common “misconceptions” noting that issues material to investors may not be required to be disclosed or deemed material by companies, and that investors indicate ESG matters are material to their investment and voting decisions.
  • A new IAIS paper provides tools and recommendations for insurance supervisors to strengthen efforts to assess and address risks from climate change.

Financial services regulatory and policy news

Banking

Capital Markets

  • SEC:
  • Spoke about “myths and misconceptions” of materiality in the context of ESG disclosure.
  • Provided testimony at a House Appropriations Subcommittee hearing (Gensler testimony).
  • Spoke about leveraging regulatory cooperation to protect investors.

Other

  • House FS Committee hearings:
  • Consumer credit reporting.
  • Investor protections related to direct listings and public offerings.
  • Holding megabanks accountable; practices, programs, and policies.
  • Senate Banking Committee hearings:
  • Oversight of Wall Street Firms.
  • Semi-annual testimony of Federal Reserve supervision and regulation (Quarles testimony).
  • SBA:
  • Proposed to revise the small business size standard in two industrial sectors to increase eligibility for its loan programs.
  • FHFA:
  • Published a “first-of-its-kind” comprehensive dataset on mortgage risk from 1990-2019.

Insurance


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