SEC Enforcement Priorities for 2021: SPACs, ESG Disclosures, Cybersecurity, COVID Disclosures, PPP Fraud

Description

The appointment of Gary Gensler as SEC Chairman, and other changes within SEC leadership, may alter the enforcement landscape. Counsel should be prepared for heightened scrutiny of SPAC transactions, digital currency, cybersecurity and ESG disclosures, among other matters.

On Mar. 31, 2021, the SEC's Division of Corporation Finance issued guidance indicating an increased focus by the SEC on SPAC accounting practices. On Apr. 8, 2021, SEC signaled that it would apply the same level of scrutiny to de-SPAC-related disclosures as it would to traditional IPO disclosures.

With the creation of the Climate and ESG Task Force, the Biden SEC has indicated its intention to focus on ESG-related misconduct and disclosure of climate risks in public company filings. The SEC has already found instances in which investment firms were making potentially misleading statements regarding their ESG investment processes.

The rise of bitcoin and the proliferation of new digital currencies triggered several high-profile SEC enforcement actions. Cryptocurrency will receive significant SEC attention under Chairman Gensler, who taught courses at MIT on blockchain technology and digital currencies.

The COVID-19 era, like other periods of economic crisis, has led to the mass uncovering of misconduct. Since the pandemic shut down in 2020, the Enforcement Division opened over 150 Covid-19-related inquiries. The SEC will likely continue to look for and investigate such misconduct in 2021 and beyond.

Listen as our authoritative panel discusses the areas of potential rulemaking and enforcement actions by the SEC and other agencies under the Biden administration.