SEC chief considering new rules on insider trading, climate risk, SPACs, and Wall Street gamification

• SEC Chair Gary Gensler outlined an aggressive plan to update the SEC's rules surrounding a number of issues. This included possible regulations concerning insider trading, Wall Street gamification, SPACs, and corporate disclosures related to climate risk.
• Gensler also suggested a tougher line on certain corporate practices. As part of this, the SEC chief called on organizations within the SEC to "reinvigorate" their "enforcement mission."
• In an interview with the Wall Street Journal, Gensler outlined potential new disclosure rules that he hopes will curtail inappropriate insider trading at public companies.
• The SEC chief also said he would put a "high priority" on new rules related to climate-risk disclosures.
• New regulations could also be in the works related to the gamification of stock trading. Gensler said he called on staff to recommend new rules in this area as well.
• In addition, Gensler put a focus on increased enforcement, calling it a "critical role" for the SEC. He pointed out that this function represents about a quarter of the commission's staff.
• Speaking about climate-risk disclosures, Gensler said he thinks that investors are calling for more transparency from companies in this area. As part of this, he would like the SEC to "help bring consistency, comparability, and reliability" to these disclosures.
• Gensler didn't provide specific proposals concerning climate-risk disclosures but said he has asked the SEC staff to recommend potential rules.
• He said formulating these regulations would be a high priority, so that market participants could get "investment-decision useful" information related to climate change.
• Responding to last week's announcement that the SEC has fired the head of a key accounting oversight board, Gensler said he didn't think the organization was "living up to its potential" in terms of its enforcement mission.
• On Friday, the SEC announced that it was removing William D. Duhnke III from the Public Company Accounting Oversight Board, or PCAOB.
• Gensler also unveiled some changes he wanted to make regarding insider trading rules. Specifically, he aimed to "freshen up" regulations surrounding 10b5-1 plans, which allow executives to trade in shares of their companies.
• As part of his insider trader focus, Gensler suggested a cooling-off period after execs adopt their 10b5-1 plans. He also argued for the value of limitations on when these stock-trading programs can be canceled.
• At the same time, Gensler advocated for more disclosures related to 10b5-1 plans and limits on the number of stock-trading programs that executives can put in place at once.
• Commenting on 10b5-1 plans in general, Gensler warned that these programs could be misused under current SEC rules.
• "In my view, these plans, though, have led to real cracks in our insider trader regimes," he said.
• On the topic of gamification of Wall Street, Gensler said that, while finance and technology have always lived in a symbiotic relationship, recent bouts of volatility have pointed to the possible need for new rules.
• "I have to ask staff to take a close look and make recommendations...around, for instance, gamification and how behavioral prompts are used within trading platforms," he said.
• On specific issue Gensler said was on the SEC's radar involved payment for order flow. This practice forms a central business model for many online trading platforms, like Robinhood, which have become popular with high-volume retail investors.
• However, in the interview, Gensler did not provide any details about potential rules related to payments for order flow.
• On the topic of special purpose acquisition companies, or SPACs, Gensler said he worried about retail investors who put money into these so-called blank-check IPOs. The SEC chief suggested that he would prefer more rigorous disclosure rules, especially surrounding any acquisition targets a SPAC might set its sights on.