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SEC Proposes Disclosure Updates and Simplifications

The SEC recently issued a proposal designed “to eliminate redundant, overlapping, outdated, or superseded provisions, in light of subsequent changes to Commission disclosure requirements, U.S. Generally Accepted Accounting Principles (U.S. GAAP), International Financial Reporting Standards (IFRS), and technology.”  The proposal also requests comments on how to address SEC disclosure requirements that overlap with U.S. GAAP.  The proposal is part of the Commission’s ongoing disclosure effectiveness review which is designed to improve disclosure requirements in a way that benefits both investors and companies.  The proposal applies to public companies, but would also involve disclosure requirements related to other regulated entities, including investment advisers and investment companies.

While Commissioner Stein voted in favor of the proposal, she did so “begrudgingly.”  She took issue with the length and “hypertechnical way” that the release frames the proposal.  Commissioner Stein stated, “[i]t is bitterly ironic that a release on disclosure effectiveness fails to present information in a clear, concise, and understandable way to the public. How can we require issuers to provide information in plain English, yet fail to meet this standard ourselves?  Moreover, how are we to fulfill our mission of investor protection if we effectively exclude commenters from engaging on rulemakings that will impact the disclosure they receive? How are we to be the investor’s advocate, if we do not provide investors with bonafide opportunities to engage?”