WASHINGTON, D.C. – Boyden Gray PLLC filed a comment on the Securities and Exchange Commission’s (SEC) consideration of a proposal by the New York Stock Exchange (NYSE) to adopt listing standards for Natural Asset Companies (NACs). The proposed rule would have allowed NACs, which were barred from making profits except where doing so would “maximize ecological performance,” to list on the NYSE.

After the NYSE submitted the proposal for SEC approval and the SEC instituted proceedings, hundreds of commenters pointed out problems with rule. Two weeks ago, the NYSE withdrew the rule. Boyden Gray PLLC’s comment argues the rule would have been illegal and raises questions presented by the NYSE’s sponsorship of the rule. 

Boyden Gray PLLC writes: “NACs are untested, unproven, and abjectly unsuited for listing on a national securities exchange.” The firm explained that the rule’s novel accounting schemes “boil down to fuzzy feelings about the environment that have been transposed into a climate academic’s idea of accounting terms.” As the firm described: “NACs would have made up for the inevitable cash losses with trumped-up accounting. The rule established both the motive and the opportunity for fraud. Think: Enron meets Greta Thunberg.”

The firm writes: “The NYSE’s submission of the NACs rule was unbecoming of a national stock exchange. It undermined confidence in the impartiality of the exchange’s approach to regulation, which has bearing on all manner of issues. If the NYSE thought it could  propose a rule that accepted illegality and defrauding investors as the necessary cost  of ‘meaningful progress on ESG issues,’ the question is: where else has the NYSE  accepted this unlawful tradeoff?” 

The full comment is below.

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