The week in GRC: SEC reopens comment periods after tech issue and FSB urges climate standard setters to avoid hardwired differences
– The Wall Street Journal (paywall) reported that many companies are delaying acquisitions because a combination of economic factors such as high inflation, rising interest rates and market volatility is lowering the confidence of buyers and sellers. During the first nine months of 2022, the value of global M&A deals announced by companies dropped 34 percent to $2.81 tn, according to Refinitiv. That’s the largest year-over-year decline since 2009, when M&A declined amid the global financial crisis by 42 percent compared with 2008 levels, Refinitiv said.
Many companies and their CFOs are putting expansion plans on hold, taking a wait-and-see approach until they have a better sense of where the economy is headed, advisers and executives said. That is despite valuations falling and the strength of the dollar against most major currencies giving US buyers more purchasing power abroad. ‘All signs are pointing to this resetting stage, where companies have taken a pause on what their M&A playbook might look like,’ said Matt Toole, director of deals intelligence at Refinitiv.
– The SEC reopened the public comment periods for 11 rulemaking releases and one request for comment due to a technological error that led to a number of public comments submitted using the SEC’s internet comment form not being received. Most of the affected comments were submitted in August 2022, but the technological error is known to have occurred as early as June 2021, according to the agency.
The SEC advised those who submitted a public comment to one of the affected proposals to check whether their comment was received and posted, and to submit if necessary. The proposals affected include a measure on cyber-security risk management, strategy, governance and incident disclosure, and one dealing with climate-related disclosures.
– The G20’s Financial Stability Board (FSB) said standard-setters must work faster to avoid hardwiring differences between their finalized climate-related company disclosures, Reuters (paywall) reported. The International Sustainability Standards Board is working on a set of global baseline norms it plans to finalize by early 2023. The EU plans to finalize its own, more comprehensive set of disclosures for 50,000 companies by next month. The SEC has also proposed climate-related disclosure requirements.
Klaas Knot, the Dutch central bank president who chairs the FSB, said developing the disclosures provides an opportunity to avoid ‘harmful fragmentation’ of markets so that users can compare companies from across the world. ‘Interoperability between the common global baseline and national and regional jurisdiction-specific requirements will be essential,’ Knot said in a letter to G20 finance ministers.
– Reuters reported that the US Department of Labor proposed a rule that would make it more difficult for companies to treat workers as independent contractors. Such a change is expected to impact the business models of ridesharing, delivery and other industries that rely on gig workers. The proposal would require that workers be considered a company’s employees, who are entitled to more benefits and legal protections than contractors, when they are ‘economically dependent’ on the company.
– The WSJ reported that the US Department of Justice (DoJ) named two prosecutors to lead its anti-money laundering (AML) and asset-recovery section, which has become an increasingly important player amid the US government’s response to Russia’s invasion of Ukraine. Brent Wible, a veteran federal prosecutor whose latest stint at the DoJ began in May 2020, has been appointed the section’s new chief. He succeeds Deborah Connor, who left the department in August after almost seven years leading the section. Wible’s principal deputy will be Molly Moeser, who has worked in the section since 2013, focusing on cases involving AML failures by financial institutions.
– Reuters reported that activist investor group Macellum Advisors, according to a letter from the hedge fund firm, is again pushing for board seats at department store chain Kohl’s Corp and the removal of its chair. Macellum wants its candidates to replace some long-tenured directors, including members of the executive committee. Earlier this year, the hedge fund firm had pushed to replace 10 directors when the retailer first tried to sell itself, but the move was rejected by investors in May. Kohl’s decided against a sale and chose to remain independent in July.
Kohl’s said it was disappointed that Macellum has launched another ‘disruptive public campaign’ five months after shareholders rejected its candidates. The company said the interactions with Macellum over the past two years have been ‘unproductive and a distraction from running the business’.
– The WSJ interviewed Adrienne Harris, superintendent of the New York State Department of Financial Services. The paper said Harris is looking to use the state’s role as a financial services leader to help set the national regulatory agenda, with a particular focus on bringing order to the cryptocurrency industry. The department, which oversees insurance companies and state-chartered banks, has an outsize influence in financial services, with many other states following its lead on regulation and enforcement. Harris wants to bring that leadership role to other areas, such as crypto and climate change.