The changes proposed by the staff of U.S. Securities and Exchange Commission (SEC) are:
- Revising securities regulations regarding financial disclosure.
- Simplifying the disclosure process. Changing exhibit filing requirements.
- Incorporating technology to improve access to information. Requiring data tagging for items on the cover page of certain filings and the use of hyperlinks for information that is incorporated by reference and already available.
Why is the SEC making changes?
These revisions cut down on time, which saves money. Also, it reduces duplication, which decreases storage needed.
Why should you care?
Disclosure requirements have been mandatory in the United States since the 1930s. The reason this is important is so investors like you know where your money is going. Before regulations were put in place any company could say they were doing very well financially even though in reality they may not have any money.
The change comes from amendments signed into law under the Fixing America’s Surface Transportation Act (FAST Act). According to the U.S. Department of Transportation website, “The FAST Act authorizes $305 billion over fiscal years 2016 through 2020 for highway, highway and motor vehicle safety, public transportation, motor carrier safety, hazardous materials safety, rail, and research, technology, and statistics programs.”
What do the authorities say?
Each of the three current commissioners has agreed with the proposed changes presented by the staff of the SEC.
“We have been asked to “scale or eliminate requirements . . . to reduce the burden on emerging growth companies, accelerated filers, smaller reporting companies, and other smaller issuers, while still providing all material information to investors.” Further, we have been directed to “eliminate provisions . . . that are duplicative, overlapping, outdated, or unnecessary.”
The proposed amendments respond effectively to our mandate under the FAST Act to prune the regulatory orchard. I choose the word “prune” carefully. The object of these amendments is to shear away dead limbs and overgrown branches, thereby improving the fruitfulness and health of the trees. Today’s amendments are not an exercise in slash-and-burn clearcutting. They are incremental changes—a snip here, a snip there—designed to shape and guide the healthy plant so that our disclosure regime will continue to bear fruit.”
Delicate pruning of regulations seems extremely important for an organization that so many people depend on. Keep an eye on SEC press releases to stay informed. See how future revisions might impact you.