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State officials challenge SEC proposal to list natural asset companies on NYSE

On Behalf of | Jan 3, 2024 | Securities and Compliance

The Securities and Exchange Commission’s new proposal involving natural asset companies (NAC) is being challenged by a coalition of state financial officers from 22 states, according to Fox Business.

The SEC’s proposed rule would allow the New York Stock Exchange (NYSE) for the first time to list NACs, a new type of environmental corporation formed to protect, restore and grow the natural assets under their management to foster healthy ecosystems.  The regulation would allow for public trading of NACs.

Led by Utah Treasurer Marlo Oaks, the group of state financial officers have written a letter to SEC Chair Gary Gensler asking that the SEC extend the public comment period by 60 days so they and other stakeholders can assess the potential impact of the rule and provide feedback.

“We have many concerns regarding the substance of the rule and the implications it would have on the markets and the lands of states we represent,” Oaks and the other officials wrote to Gensler.

They added, “The SEC’s stated role is to protect investors and promote capital formation. We believe this rule, if adopted, would act in direct opposition to the stated goals of the SEC.”

NACs were introduced in 2021 as a new type of Environmental, Social, and Governance investment. They are a joint venture between Intrinsic Exchange Group and the NYSE, which owns a minority stake in IEG.

The proposed rule says these “sustainable enterprises” will end overconsumption and underinvestment in nature by “bringing natural assets into the financial mainstream.”  The NYSE said natural assets that could benefit from the NAC structure include natural landscapes such as forests, wetlands and coral reefs, as well as working lands such as farms.

“The SEC’s proposed rule creating natural asset companies will not only upend the accepted standards of value by which businesses are judged, it would pave the way for ESG fanatics to remake the American landscape,” Derek Kreifels, CEO of the State Financial Officers Foundation, told FOX Business. “NACs would lock away vital resources that have underwritten America’s prosperity, sacrificing them on the altar of climate alarmism.”

Kreifels said the SEC’s consideration of the rule change after what he called “a ridiculously short comment period” indicated that the commission is “trying to sneak this measure through without necessary scrutiny.”

In proposing the rule change, the SEC said “There is significant and growing interest in investing in asset classes that are consistent with the objective of protecting and improving the environment. The Exchange believes that the listing of NACs will provide investors with an investment vehicle that meets this demand.”

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