SEC Solicits Comment on Disclosure Effectiveness
For years, the SEC staff has been urging companies to make reports shorter and more readable and has been previewing potential changes to its primary disclosure regime, Regulation S-K. In April, the SEC delivered a much-anticipated 341-page concept release, which is a precursor to rulemaking. The SEC requests public comment on 340 numbered questions and many more additional sub-questions regarding the presentation of business and financial information. Among other topics, the concept release contemplates requiring a rank-order and quantification for risk factors, questions whether the current materiality standard for disclosures remains adequate, asks whether there are steps the SEC could take to reduce compliance costs for companies, and considers whether information could be made more navigable through the use of cross-references, websites and hyperlinks. In addition, the release requests feedback on potential line-item disclosures regarding sustainability and other public policy issues. The SEC will find comment letters from companies persuasive in its eventual rulemaking and is sure to receive input from the investor community. Accordingly, companies are strongly urged to provide their perspective to the SEC during the comment period, which ends July 21, 2016. Read the SEC press release (containing a link to the full release). Read about concerns in TheCorporateCounsel.net’s blog and general assessments by E&Y and Deloitte.