This site uses cookies to provide you with a more responsive and personalised service. By using this site you agree to our use of cookies. Please read our cookie notice for more information on the cookies we use and how to delete or block them.
The full functionality of our site is not supported on your browser version, or you may have 'compatibility mode' selected. Please turn off compatibility mode, upgrade your browser to at least Internet Explorer 9, or try using another browser such as Google Chrome or Mozilla Firefox.

SEC chair speaks about "The Path Forward on Disclosure"

  • Speech — gray Image

Oct 16, 2013

SEC Chair Mary Jo White gave a speech at a U.S. leadership conference on the issue of information overload. Although she was primarily referring to the disclosures required by SEC Regulation S-K, the questions she raised in her speech are fundamental and important in the context of the international debate on disclosures as well.

Opening her speech, Ms. White explained that one of the most meaningful powers that the SEC has to wield on behalf of investors is its authority to require companies to provide investors with the information they need to make informed investment and voting decisions. However, she raised the question about whether investors need and are optimally served by the detailed and lengthy disclosures about all of the topics that companies currently provide in their reports. Therefore, Ms. White maintained, it is important to ask a few questions that could lead to finding the right angle for tackling the problem.

  • To her mind, the SEC should ask itself whether there are specific disclosure requirements that are simply not necessary for investors or that investors do not want. Some disclosure requirements may have been appropriate in the past, but may no longer reflect the reality of how businesses operate now or how investors use information and where they can obtain it.
  • It might also be worthwhile for the SEC to consider whether investors would benefit from disclosures that are more tailored to the industry in which a company operates.
  • Ms. White also asked whether there is a way to avoid repetition in a document, which often results from one set of disclosure requirements overlapping with another set of requirements. In this context, the SEC might look at line item disclosures for certain topics or a principles-based approach.
  • She also brought up the question of timeframes and whether investors are getting the information they need when they need it. She warned, though, that it is important to consider whether shorter timeframes would impose an undue burden on companies and whether requiring more frequent updates could lead to a decrease in the quality of the information.
  • However, Ms. White not only talked about questions the SEC (or any standard setter or regulator) should ask itself, she also said that there are many sources that contribute to the information overload. She specifically commented on disclosure overload that results from a company's decision to disclose more information rather than less in order to be on the safe side. In this context, she mentioned a 1976 U.S. Supreme Court ruling that a fact is not "material" if an investor "might" find it important but rather if "there is a substantial likelihood that a reasonable shareholder would consider it important."

Please click for access to the full text of the speech by Mary Jo White on the SEC's Web site.

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.