Updates on Regulation, Trading, and Market Reforms for the Alternative Investment Community

SEC Announces Enforcement Task Force Focused on Climate and ESG Issues

On March 4, 2021, the SEC announced the creation of a Climate and ESG Task Force in the Division of Enforcement to led by Kelly L. Gibson, the Acting Deputy Director of Enforcement (the “Task Force“)  The Task Force’s purpose is to better police the market, pursue misconduct, and protect investors, according to Kelly L. Gibson.

Consistent with increasing investor focus and reliance on climate and ESG-related disclosure and investment, the Task Force will develop initiatives to proactively identify ESG-related misconduct.  The Task Force will also use data analysis to mine and assess information across registrants, to identify potential violations.

The initial focus will be to identify any material gaps or misstatements in issuers’ disclosure of climate risks under existing rules.  The Task Force intends to analyze disclosure and compliance issues relating to investment advisers’ and funds’ ESG strategies.  The Task Force will be limited to enforcing existing disclosure requirements instead of formulating additional ESG-related disclosures.

The Task Force will complement the SEC’s recent appointment of Satyam Khanna as a Senior Policy Advisor for Climate and ESG and will work closely with SEC’s Divisions of Corporation Finance, Investment Management, and Examinations.  The Task Force’s launch follows President Biden’s SEC Chairman nominee, Gary Gensler, March 2, 2021 comment at his Senate confirmation hearing on the need for companies to disclose climate risks to allow the investor community to decide what climate risks are material to them.  Gensler added that as Chairman, he would push for increased public disclosure and increased consistency and comparability to such disclosures.
Moreover, On March 3, 2021, the SEC published its 2021 Examination Priorities that included an enhanced focus on climate and ESG-related risks, and in particular whether companies are considering effective business continuity plans in response to growing climate change risks.

In addition, the Climate and ESG Task Force will evaluate and pursue tips, referrals, and whistleblower complaints on ESG-related issues, and provide expertise and insight to teams working on ESG-related matters across the Division.

The SEC’s press release can be seen here: https://www.sec.gov/news/press-release/2021-42

About the author

Debbie represents private investment funds and investment advisers in connection with fund structuring, advertising, private placement procedures, compliance policies and procedures, side letters, placement contracts, related agreements and issues. Debbie’s experience includes private equity funds, venture capital funds complex partnership reorganizations, domestic and offshore hedge funds, Opportunity Zone Funds, real estate investment funds and trusts, EB-5 funds, and large master-feeder structures.  Debbie has extensive experience with private securities offerings and financial products, including through crowdfunding, domestic and international joint ventures, global equity offerings, where she represents placement agents, issuers, broker-dealers, public and private companies, investment banks, financial institutions, private funds, and investment advisers.

Debbie also represents family offices, private funds, investment advisers and other clients in connection with impact investing including establishing Environmental, Social, and Governance (ESG) investment policies and practices and with policies regarding anti-money laundering (AML), Foreign Corrupt Practices Act (FCPA), derivatives and FINRA and SEC-compliant investment regimes and operations.

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Updates on Regulation, Trading, and Market Reforms for the Alternative Investment Community