The SEC, which is studying an overhaul of disclosure regulation, should push for faster disclosure that more directly addresses investors’ interests, according to Kara Stein, an SEC commissioner.
In a speech to a meeting of the non-profit Council of Institutional Investors, Stein also said companies should disclose information in a way that is accessible to average Americans but still contains information for larger investors with greater understanding of the markets.
‘In an era with hundreds of pages per filing for some large issuers, many have argued that we simply need to cut back,’ Stein said of the ongoing SEC review of disclosure roles. ‘Certainly removing redundancies and outdated disclosures may be part of this exercise, but that should not be the central focus. Our focus needs to be on better disclosure.’
The SEC said at the end of last year that it aims to study current regulations surrounding corporate disclosure with an eye to eliminating duplication, ensuring effectiveness of the information included, reducing compliance costs and simplifying requirements.
Stein said any review of disclosure rules should focus on what would best serve investors and that the SEC should always seek to ascertain what type of information investors are most interested in, including issues that may be part of a temporary trend, such as company performance related to executive compensation.
‘We also need to make disclosures more accessible and usable. In an era where nearly all data is electronic, it baffles me that such a huge portion of public disclosures are presented in a format that isn’t structured and easily accessible for analytics,’ she pointed out. ‘We should be making sure that as many disclosures as practicable are required to be submitted in useful, structured formats that investors, the public and the commission can use.’
She added that disclosure should also be more uniformly timely because ‘news and business move faster than ever before. Does it still make sense for investors to wait for quarterly or annual statements that are delivered weeks or months later?’
