Washington, D.C. – In case you missed it, the Club for Growth Foundation submitted a comment to the Securities and Exchange Commission (SEC) outlining concerns over a proposed rule change from the New York Stock Exchange which would promote political investing through the creation of a Natural Asset Company (NAC).
This proposal would undermine the neutrality and mission of an exchange to operate freely, as the NYSE is seeking to “[e]nd the overconsumption of and underinvestment in nature.” Kevin Stocklin of the Epoch Times referenced the Foundation’s comment in his coverage of the proposal.
Click here to read the complete comment submitted to the SEC from the Club for Growth Foundation.
Click here to read the full coverage from Kevin Stocklin and the Epoch Times.
COMMENT EXCERPTS:
The Club for Growth Foundation’s (“Foundation”) core mission is to inform the general public about the many benefits of economic freedom and limited government. We write out of concern that the proposed change to the rules of the New York Stock Exchange (“NYSE”) would depart from the statutory mission Congress has given exchanges and the Commission itself under the Securities Exchange Act of 1934 by distorting the securities marketplace to favor particular domestic policy goals—distortion that would be antithetical to the ideals of the free market.
…
As should now be clear, exchanges do not exist to promote substantive policy goals like public health and a pristine environment; rather, their purpose under federal law is to facilitate transparent and efficient trading of securities among private parties. This is not to denigrate all the many substantive goals that other agencies and entities pursue; it is just to say that these goals are not the mission of exchanges. To ensure that exchanges remain laser-focused on their mission of promoting the transparent and efficient trading of securities, Congress provided that the Commission may not register an exchange if its rules aim “to regulate … matters not related to the purposes of” the securities laws.
…
The impropriety of the NYSE’s goal here becomes even more apparent when we consider the many federal, state, local, and private efforts dedicated to conserving natural resources. Conservation is a main purpose of the Department of the Interior and of the 84 million acres of the federal park system that the Department administers. It is also a main mission of the U.S. Department of Agriculture’s Forest Service. Conservation efforts are tremendously important, and the Foundation supports them. But they are not the province of the securities laws, the NYSE, or the Commission, which lacks the competence to engage in this mission entrusted to others. This lack of competence in the subject matter to be regulated, the Supreme Court has explained, is a compelling sign that Congress did not intend such regulation in the first place.
…
But this is not the only way the NYSE’s new rule would run counter to the purpose of the securities laws. It would also impede the “free and open market” that exchange rules are bound to promote, as well as the efficiency, competition, and capital formation that the Commission must consider when evaluating a proposed change to a self-regulatory organization’s rules. For natural asset companies would be required to commit to a set of onerous restrictions that would tie up both capital and land in inefficient, non-competitive use.
To remain listed on the NYSE, for instance, natural asset companies would be required to license ecological benefits of natural assets from their owners for a minimum of ten years and would be delisted if they alienate a license. Conditioning investment opportunities on such long-term commitments would tie up capital, drying up the efficient capital markets that the exchanges exist to promote and degrading the competition both for capital and for the development of natural assets. Further, NACs would be required to commit to onerous restrictions on the economically productive use of their land. Again, while many other programs sensibly set aside land from productive use for the sake of conservation and other important goals, the NYSE and the Commission exist to pursue not those goals but rather a transparent and efficient securities marketplace—a goal undermined by reserving land from economically productive use.
…
I cannot close without noting one unseemly feature of this proceeding: the NYSE owns an interest in Intrinsic Exchange Group Inc., the organization pioneering NACs and which intends to “promote the listing of NACs on the NYSE.” Though the NYSE commits to evaluate “the suitability for listing of any applicant NACs” on the merits, it is difficult to believe that NYSE staff charged with evaluating a natural asset company’s application for listing would be impervious to the interests of the NYSE’s partly-owned subsidiary the Intrinsic Exchange Group. At the very least, this close association between the Intrinsic Exchange Group and the NYSE creates an appearance of impropriety.
For the foregoing reasons, the Club for Growth Foundation urges the Commission to disapprove the NYSE’s proposed rule. If it chooses not to do so, it should reopen the comment period on the rule. The Securities Exchange Act requires the Commission to “give interested persons an opportunity to submit written data, views, and arguments concerning” proposed rule changes by self-regulatory organizations. Here, though, the Commission gave members of the public a dramatically foreshortened time to comment—only twenty-one days, seven of which were weekends or holidays. And while the Commission later gave itself more time to respond to the NYSE’s submission, it never reopened the comment period for the public. To give the public a meaningful opportunity to express views on this important development, the Commission must now reopen the comment period.
Further, it should now be clear that the NYSE’s rule proposal raises issues far too important for approval under the Commission’s summary decision procedure. If the Commission elects not to disapprove the proposal, it should “institute proceedings … to determine whether the proposed rule change should be disapproved.” Doing so would give the Commission the benefit both of a hearing and of time for adequate consideration of the questions raised by commenters (and members of the public who would comment if given adequate time to
do so).
EPOCH TIMES EXCERPTS:
Wall Street has found a new way to fight global warming and turn a profit in the process, by monetizing the right to control America’s public and private land.
The New York Stock Exchange (NYSE), together with an organization called the Intrinsic Exchange Group (IEG), have proposed setting up a new type of company called a Natural Asset Company (NAC), which would pool investors’ money from around the world to buy the rights to land in the United States with the goal of restricting its use to “sustainable” endeavors.
According to the NYSE’s filing with the Securities Exchange Commission (SEC), despite the many options to invest in eco-friendly funds or donate to nonprofits for land preservation, “investors still express an unmet need for efficient, pure-play exposure to nature and climate.
“Ending the overconsumption of and underinvestment in nature requires bringing natural assets into the financial mainstream,” the NYSE states.
The goal of this initiative is to turn the rights to use public land and water resources into financial instruments so that they can be bought, sold, and traded for profit.
…
David McIntosh, president of the Club for Growth Foundation, questioned why “the New York Stock Exchange—the largest stock exchange and the hallmark of free markets across the globe—is suddenly seeking to alter its rules to favor particular domestic policy goals.”
In an emailed statement to The Epoch Times, Mr. McIntosh wrote that “an exchange is not the proper vehicle for ideological advocacy … There is no financial, legal, or practical reason why conservationists should be investing on the NYSE rather than giving a tax-deductible contribution to a nonprofit.”