Remarks At The “SEC Speaks” Conference 2025, SEC Commissioner Mark T. Uyeda, Washington D.C., May 19, 2025

Thank you, Cicely [LaMothe], for the introduction. Thank you also for co-chairing this year’s SEC Speaks conference with Sam Waldon. For the past four months, both of you—like a number of others at the Commission—have been pulling double duty as both acting division directors in addition to your regular roles as deputy director of the disclosure review program for the Division of Corporation Finance and as chief counsel for the Division of Enforcement, respectively. The Commission, its staff, and the public have benefitted from your leadership during this period. My remarks today reflect my views as an individual Commissioner and not necessarily the views of the full Commission or my fellow Commissioners.

What a difference a year makes. On January 20, 2025, the Commission entered a new period in its 90-year history, and SEC Speaks comes at a perfect time to discuss some of those changes. Financial regulatory policy can be a bit like navigating over the oceans. You want a North Star to guide you to your desired direction. You need to be observant of the weather and the seas while avoiding rocky outcrops and other obstacles. There may be other hazards as well: for the past four years, the SEC’s enforcement bite has been lurking below the surface like a great white shark, waiting for its next meal. Perhaps it is only fitting that this year marks the 50th anniversary of the movie Jaws.

Staying on course is an important objective, from which the Commission strayed mightily from its historical path. The SEC would use its power and authority to address climate change, diversity and inclusion, share repurchase policy, and financial products and services, predicated on whether it favored or disfavored specific investments or practices.

Since January, the Commission has undergone a major course-correction. Instead of tackling various perceived social ills through financial regulatory tools, the SEC has returned to its core mission of regulating the capital markets. One specific instruction has been to make clear to the SEC staff that they have full authorization to meaningfully engage with market participants. The quality of regulation is vastly improved when the Commission engages with the public—especially when it comes to new technologies and services. Regulators should be constantly seeking out informational inputs rather than reflexively rejecting them. Only by doing so can regulators identify areas of improvement, whether they relate to strengthening investment safeguards, constructing a practical crypto regulation framework, improving access to private investments, or reducing barriers for companies pursuing initial public offerings (IPOs).

Some of the Commission’s recent course-corrections have included:

• • Creating the Crypto Task Force, a cross-divisional effort, led by Commissioner Hester Peirce, to examine under what circumstances crypto should be considered securities and, in such situations, how should the securities laws apply to such crypto;
  • Dismissing enforcement actions in crypto cases, where generally the only alleged violation was the failure to register the offer and sale of a token with the Commission, particularly where the status of such token would be an open question being deliberated by the Crypto Task Force;
  • Withdrawing Staff Accounting Bulletin (SAB) No. 121 with respect to accounting for crypto by public companies and replacing it with SAB No. 122;
  • Organizing public roundtables to discuss what regulation of crypto should look like moving forward;
  • Reiterating the application of long-standing statutory and regulatory provisions regarding eligibility to use Schedule 13G; and
  • Issuing Staff Legal Bulletin No. 14M on shareholder proposals and rescinding the prior Staff Legal Bulletin No. 14L, which was a significant deviation from decades of administration of the Commission’s shareholder proposal rule.

Approximately one month ago, I took great pride in swearing in Paul Atkins as the Chairman of the Commission and am pleased to be working alongside him in refocusing our regulatory resources and tools on the SEC’s mission.

I look forward to Chairman Atkins’ leadership over the next four years and moving away from a perceived politically motivated regulatory and policy drift that was outside of the Commission’s jurisdiction and expertise.[1] At times, the SEC appeared willing to use its governmental imprimatur to take on social issues far beyond the agency’s scope. A critical—and historically informed—understanding of the SEC’s mission is necessary to understand why the significant policy shifts of recent years have undercut and weakened the agency.

These policy drifts were particularly destructive as they consumed significant staff resources. For example, the SEC’s climate-related disclosure adopting release came in at 885 pages—longer than many major novels. Complex rules like climate disclosure require extensive economic research and, in this case, the Commission expended large amounts of time and staff resources on issues best left to other agencies like the Environmental Protection Agency or the U.S Department of Energy.

The Commission adopted the final climate-related disclosure rule on March 6, 2024, by a 3-2 vote from which Commissioner Peirce and I dissented. The rule was challenged in litigation, consolidated in the U.S. Court of Appeals for the Eighth Circuit. Full written briefs defending the rule were filed with the Eighth Circuit prior to the change in Administrations, although oral argument has not yet occurred.

On March 27, 2025, the Commission voted to end its defense of the rule and advised the court of this decision. However, the final adopting release and the Commission’s prior written briefs remain filed with the court, and other interested parties are prepared to defend the rule in oral argument before the court. Thus, in my view—though keep in mind that I am not a litigator by background—there is ample discussion and argument before the court on whether the Commission had statutory authority to issue the rule and, if so, whether the Commission did so in compliance with the Administrative Procedure Act (APA).

Some have suggested that the Commission could simply move to rescind the climate-related disclosure rule, which I view as a diversionary tactic to avoid answering the key questions of statutory authority and compliance with the APA. As the Fifth Circuit observed in National Association of Manufacturers v. SEC,[2] with respect to the 2022 recission of the Commission’s proxy voting advice rule issued under Chairman Jay Clayton, “an administrative agency may alter or rescind its policies, including when a new administration enters office.” However, quoting the U.S. Supreme Court’s opinion in FCC v. Fox Television Stations,[3] the Fifth Circuit stated that when a “new policy rests upon factual findings that contradict those which underlay its prior policy,” a more detailed explanation is required, and that a failure to explain its decision to disregard facts that underlay the prior policy is arbitrary and capricious. The Fifth Circuit then vacated the Commission’s 2022 action—one of a number of rulemakings from the past four years that was struck down by the courts.

For the Commission to rescind the climate-related disclosure rule—and address the countless factual findings discussed in that 885-page release—would place a significant strain on the Commission’s resources. This effort would be a difficult lift, and it would potentially take away staff resources needed to advance the regulatory regime with respect to crypto and capital formation. Further, any such recission would further be likely challenged in the courts. If such rescission is struck down, then the question of whether the original climate-related disclosure rule was lawfully adopted would escape judicial review altogether.

Costly and Ineffective: Conflict Mineral Disclosures

Despite the adopting release’s claims to the contrary, I do not believe that the climate-related disclosure rule was ever about financial materiality. Because if it had, an impartial observer would have recognized that the concept of materiality—including climate change—is already well embedded in the SEC’s disclosure obligations, whether in the description of the business, risk factor disclosure, management’s discussion and analysis, financial statements, and notes to the financial statements. The Commission twisted itself into knots to conclude that a 1% climate risk effect is quantitatively material. In my view, the climate-related disclosure rule was more about politics and social change than financial regulation. At any time, Congress could have enacted legislation to address greenhouse gas emissions and climate change, but it chose not to do so. If Congress, which is politically accountable to the voters, failed to take action, then I see little reason for unelected financial regulators without expertise in climate policy to fill that gap.

If the Commission had studied the historical past, it would have realized that social change through financial disclosure regulation does not usually work. One need only to look at Section 1502 of the Dodd-Frank Act, which directed the Commission to issue rules requiring certain companies to disclose their use of “conflict minerals” that originate out of the Democratic Republic of the Congo or adjoining countries. The term “conflict minerals” includes gold, tantalum, tin, and tungsten. Granted, this obligation was a directive set forth in legislation, but the abject failure of this provision should give pause to further attempts to use the SEC’s disclosure regime to achieve social or political goals.

You don’t need to take my word with respect to the failure of the conflict mineral rules to achieve their intended objective. The U.S. Government Accountability Office (GAO) reported in 2024 that peace and security in the Democratic Republic of the Congo had not improved with the SEC disclosure rule.[4] The GAO concluded that the SEC rules had “not reduced violence in the Democratic Republic of the Congo (DRC) and has likely had no effect in adjoining countries.”[5] In fact, the GAO found that “the rule was associated with a spread of violence.”[6]

The cost of this rule has created significant regulatory compliance costs for U.S. public companies without clear corresponding benefits. By discouraging public companies from sourcing tin, tungsten, and tantalum from the DRC, the policy has acted as a de facto boycott on such mineral purchases.[7] This result is unfortunate because tin, tungsten, and tantalum have each been classified by the U.S. Geological Survey on a list of mineral commodities critical to the U.S. economy and our national security.[8]

Tantalum is used in electronic components, mostly capacitors and in superalloys. Tin is used as a protective coating for steel and in alloys. Tungsten is primarily used to make wear-resistant metals. Not only does this rule take away the DRC as a potential source of these critical minerals; it limits the ability of American companies that seek to acquire such minerals from improving the economic conditions in that region of Africa. In so doing, the SEC rules have the unfortunate effect of ceding U.S. influence in that portion of the world to geo-strategic powers that may have less respect for human rights and dignity. Importantly, this SEC rule hurts American companies from competing in a global marketplace.

It is far past time to re-evaluate such obligations with a view to determining whether such disclosure requirements should remain in effect. Key provisions of the underlying statute provide that it terminates on the date on which the President makes certain determinations. Congress can also repeal this statutory provision. In any event, the SEC should cease using financial disclosure regulations to bring about human rights changes in Africa, to the extent permitted by law.

Eligibility to Report on Schedule 13G

One argument raised about the need for non-financial environmental, social, and governance (ESG) disclosure is that shareholders, or persons acting on behalf of beneficial owners such as asset managers, require such information for proxy voting purposes and for stewardship engagement activities. As the beneficial ownership levels held by asset managers has significantly increased in the past couple of decades, market participants should be aware of the longstanding rules regarding disclosure of beneficial ownership.

Congress created this reporting regime in 1968 to “provide information to the public and the subject company about accumulations of its equity securities in the hands of persons who then would have the potential to change or influence control of the issuer.”[9] Initially, all persons beneficially owning more than five percent of a public company were required to report their ownership on a Schedule 13D.[10] In 1977, pursuant to its rulemaking authority, the SEC began permitting certain categories of institutional investors to report their ownership on a shorter form.[11] This form, now called Schedule 13G, requires less disclosure about the beneficial owner, is less costly to prepare, does not need to be initially filed as quickly, and does not need to be updated as frequently, when compared to Schedule 13D.[12]

Asset managers can report on Schedule 13G if they have acquired the securities in the ordinary course of their business and they have not acquired, and do not hold, the securities with the purpose or effect of changing or influencing the control of the issuer of the securities.

With respect to whether an asset manager’s engagement has the purpose or effect of changing or influencing “control” of the company, Rule 12b-2 under the Securities Exchange Act defines “control” under the Securities Exchange Act as the power to direct or cause the direction of the management and policies of a company.[13] A company’s board, and particularly the members on a committee overseeing ESG matters, may have the power to direct or cause the direction of the company’s ESG practices. Can an asset manager’s stewardship and engagement activities—with the implicit threat of voting against a director standing for re-election—be described as having the purpose or effect of changing or influencing control of the company?

Earlier this year, the SEC staff addressed this question by issuing Compliance and Disclosure Interpretation (CDI) 103.12,[14] which stated that a shareholder who discusses with management its views on a particular topic and how its views may inform its voting decisions, without more, would not be disqualified from reporting on a Schedule 13G. A shareholder who goes beyond such a discussion, however, and exerts pressure on management to implement specific measures or changes to a policy may be “influencing” control over the issuer.

Thus, Schedule 13G may be unavailable to a shareholder who recommends that the issuer undertake specific actions on a social, environmental, or political policy and, as a means of pressuring the issuer to adopt the recommendation, explicitly or implicitly conditions its support of one or more of the issuer’s director nominees at the next director election on the issuer’s adoption of its recommendation.[15]

In my view, the wording of the CDI in fact broadens the scope of permissible activities while still remaining eligible for Schedule 13G, which is premised on not “influencing” control of the company. “Influencing” is not defined under the Securities Exchange Act and a common dictionary definition is “the act or power of producing an effect without apparent exertion of force or direct exercise of command.”[16] By requiring that a shareholder needs to “exert pressure on management,” the CDI indicates that there needs to be something more than the mere planting of an idea with management in order to lose Schedule 13G eligibility.

This result reflects a commonsense interpretation of longstanding rules: if you are pressuring the board to undertake certain actions relating to the management or policies of an issuer, whether ESG-related or otherwise—coupled with voting threats, such actions are covered by existing rules and should be treated as such. As with the unfounded concerns that Regulation FD would cease all communications between companies and shareholders, I am confident that asset managers will be able to navigate the parameters of the applicable Exchange Act rules to have appropriate levels of engagement with boards and executives of public companies without losing eligibility to file on Schedule 13G—and if an asset manager chooses to exert pressure, then they can provide the disclosure and transparency surrounding such conversations as required by Schedule 13D.

Rethinking the Role of Administrative Law Judges in SEC Administrative Proceedings

Finally, I would like to discuss the future of administrative law judges (ALJs) at the SEC. For background, the Commission may institute administrative enforcement proceedings, seeking civil penalties, cease-and-desist orders, and other remedies. The expanded use of administrative proceedings by the SEC after enactment of the Dodd-Frank Act in 2010 led to increased criticisms of this choice of venue.[17] Such criticisms, in part, laid the groundwork for litigation that resulted in the Supreme Court’s opinion in SEC v. Jarkesy.[18] Earlier this year, my colleague Jaime Marinaro and I published a law review article[19] exploring potential new paths forward, whereby the Commission can use administrative proceedings in a manner that is consistent with the protections provided by the U.S. Constitution. One concern was that, under the prior system of administrative proceedings, even when defendants “win” before an ALJ, they can “lose” upon Commission review.

The perceived unfairness—and the limited efforts of the Commission to address such failings—contributed to setting the stage for full-blown constitutional challenges on the Commission’s administrative proceedings, culminating in the decision in Jarkesy. ALJs can play an important and constructive role at the SEC, providing benefits to market participants and investors through a timely, efficient, and thoughtful process. Due to the repeated nature of types of cases brought before ALJs, they can develop subject matter expertise to adjudications as compared to a federal district court judge who reviews a wide variety of cases.

We envision a new direction for administrative adjudication. It should be codified in SEC internal procedures that the ALJs operate under the direction of the Commission as a whole. Because the Division of Enforcement, the largest SEC division, reports directly to the Chairman, responsibility for oversight of the ALJs should be given to a non-Chair commissioner. One approach would be to randomly assign one non-Chair commissioner to oversee the ALJ in a specific administrative proceeding.

Another key suggestion is for the Commission to consider selecting the forum based on remedies. Some remedies are more appropriate for adjudication by the agency, whereas other remedies raise constitutional concerns on whether the defendant should have the right to an independent adjudicator.

Actions seeking non-monetary remedies, such as the issuance of cease-and-desist orders, orders requiring an accounting, and orders to prohibit a person associated with registered entities from serving as an officer or director, are appropriately handled in administrative proceedings. While there are real-life effects from being subject to such actions, particularly with respect to professional reputation, they do not have the attribute of the Executive Branch deciding to seize property of persons without the oversight of an independent adjudicator. In each case, the defendant, if unsatisfied with the administrative proceeding, will have the ability to appeal to an Article III court.

For similar reasons, the Commission should also use administrative proceedings to issue orders denying the registration of a person as a regulated entity, censuring, placing limitations on the activities, functions, or operations of a regulated entity, and temporary and permanent suspensions as well as to suspend or revoke the registration of a security.

Where civil penalties are permitted in administrative proceedings by Jarkesy, the SEC should limit the amount sought. To avoid the appearance that the SEC is stacking the odds in its favor, the SEC should not seek claims for disgorgement and civil penalties in an amount that exceeds a single Tier 1 violation.[20] While such a ceiling is a line-drawing exercise, limiting monetary remedies would potentially ameliorate the concerns raised by critics of administrative proceedings. Finally, any administrative proceeding should potentially be subject to de novo review in U.S. district courts rather than the current practice of being reviewed directly by the U.S. courts of appeals, which utilize a “substantial evidence” standard that is highly deferential to agency findings.

Effective Regulatory Impacts

As I look forward to working alongside Chairman Atkins and my fellow commissioners, I am confident that the years ahead will bring regulatory improvements and proactive efforts to address new and emerging issues—all underpinned by leveraging the talent of the SEC’s staff.

Specifically, I am heartened by the move away from regulation by enforcement. This is especially true when market participants make efforts to engage with us, but such efforts are rebuffed. Returning to Jaws, market participants should not feel like defenseless swimmers in the ocean with the foreboding soundtrack by John Williams playing in the background.

The Commission should undertake efforts to provide assurances that regulation by enforcement will not be a tool used for future policymaking. As you may recall, three years later, Jaws 2 came to theatres with the tagline “[j]ust when you thought it was safe to go back in the water…”

The SEC’s resources and policy should be deployed in coherent ways that minimize the risk of policy drift and overreach that occurred in recent years. A steady and predictable policymaking course in accordance with the Commission’s historical norms benefits all market participants and enhances the agency’s regulatory credibility.

Thank you to the co-chairs, organizers, panelists and attendees; it is your participation and thoughtful engagement with these topics that makes this conference a success. I hope you enjoy the rest of the conference.