Episode 225: “Protecting Investors from an Overreaching Regulatory State” with Chris Iacovella

When Walmart went public in 1970 and soon thereafter listed on the New York Stock Exchange, its SEC disclosure prospectus was 20 pages long. 

Today, a prospectus requires massive numbers of mostly obscure disclosures imposing very real liabilities for the issuing company - but which no one reads, except for lawyers who charge $2,000 an hour to read it and to write it - and which can run upwards to 300 pages or more. 

Under President Joe Biden’s whole of government effort to weaponize federal agencies, this regulatory creep has become an outright onslaught of new regulations. Except now it brings an overt political agenda to promote ESG and “equity” outcomes.

Case in point is the SEC under Chairman Gary Gensler (who was Hillary Clinton Campaign’s CFO), which has proposed 55 new rules and massive climate change disclosure requirements without any mandate from Congress.

“Over the last two years, we've seen more rules than we've ever seen before,” explains my guest on this episode Chris Iacovella, “the amount of paper, the amount of costs that are being heaped on companies, not just in the financial services space, but in every sector of our economy, are far outweighing whatever good they are supposed to be doing.”

Chris Iacovella is in a position to know. He is the President and Chief Executive Officer of the American Securities Association, and has deep expertise in the equity, fixed income, and derivatives markets, as well as growth capital and wealth management. Prior to becoming CEO of the ASA, he was the CEO of the Equity Dealers of America and Director of Global Government Affairs at Bloomberg LP. 

“Gensler claims that he has to do this because investors are clamoring for this disclosure, but it's not investors that are clamoring for it. It's Wall Street asset managers, investment banks, and institutional investors who are pushing an ESG political agenda into the boardroom that they can't get through Congress.”

This is just one of the many concerning issues we get into in this episode. Some others:

• The higher fees Wall Street charges for its ESG funds.

• Klaus Schwab (of the World Economic Forum) and his “stakeholder” capitalism and how Wall Street has adopted many of his views. 

• Public company security regulations seeping into private businesses.

• A long segment about how the Chinese have used the US capital markets to access to American capital and allowing them to fund their military and economic rise with our money.

• Something obscurely called the Consolidated Audit Trail where the SEC has decided to add to its surveillance capabilities, the ability to collect all of the personal and financial information of every investor who has a share of stock in our capital markets. 

“Can you imagine if the SEC entered into a memorandum of understanding with the IRS? Then the government would have a true and complete picture of not only your securities holdings, but also any businesses that you might own that are private, any real estate that you may own. It's would be complete picture of what your wealth is.”

There’s a lot to unpack in this episode, but I think you’ll find it worth your time.