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Home » Blog » SEC’s Fort Worth Regional Office Investigating Underwriter Disclosures on Environmental, Social, and Governance Issues

SEC’s Fort Worth Regional Office Investigating Underwriter Disclosures on Environmental, Social, and Governance Issues

By Toby M. Galloway & Matthias Kleinsasser on January 7, 2022
Posted in Broker Dealer

It’s not a secret that, under the Biden administration, the Securities and Exchange Commission has prioritized enforcement of disclosures concerning Environmental, Social, and Governance Issues (ESG), going so far as to form an enforcement task force to examine misconduct related to these disclosures.  Recently, the SEC’s Fort Worth regional office reportedly launched an investigation into ESG disclosures by underwriters relating to investments in the oil-and-gas and firearm industries.

Many financial institutions have enacted policies limiting their participation in these industries.  In response, recently enacted provisions of the Texas Government Code place restrictions on the ability of Texas governmental entities (e.g., state and local governmental bodies issuing securities) to invest with, or enter into contracts with, companies that “boycott” or “discriminate” against the oil-and-gas and firearm industries.  See Tex. Gov. Code Chapters 809 and 2274.  The new laws require financial institutions doing business with Texas governmental entities to certify they are not boycotting or discriminating against these types of companies.  The SEC is reportedly investigating whether financial institutions doing underwriting work in Texas are being consistent in what they disclose to investors and the State of Texas regarding these hot-button issues.  The Reuters article reporting the investigation is available here.


Winstead’s Securities Litigation & Enforcement Team

Winstead’s Securities Litigation and Enforcement team has extensive experience handling disclosure investigations, as well as resulting enforcement actions.  The team is jointly led by Toby Galloway, former Chief Trial Counsel for the SEC’s Fort Worth office, and Ronak Patel, former Deputy Securities Commissioner of Texas, and is staffed with a deep bench of attorneys well-suited to help clients navigate the choppy waters of an SEC inquiry.

 

 

Disclaimer: Content contained within this article provides information on general legal issues and is not intended to provide advice on any specific legal matter or factual situation. This information is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. Readers should not act upon this information without seeking professional counsel.

Tags: disclosures, enforcement, Environmental Social Governance Issue, SEC Enforcement
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The Securities Litigation and Regulatory Enforcement resource website provides legal news, trends, and insights into navigating the complexities of the Securities Exchange Commission (SEC), U.S. Department of Justice (DOJ), Financial Industry Regulatory Authority (FINRA), Texas State Securities Board, and other state securities regulators.  This is a go-to resource for broker dealers (BDs), investment advisers (IAs), general counsel (GCs) and directors and officers (D&Os) throughout Texas and across the nation.

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