U.S. Chamber Releases Recommendations To SEC For Corporate Disclosure Reform

Tuesday, July 29, 2014 - 11:15am

Center for Capital Markets Competitiveness Identifies Specific Areas for Streamlining and Modernization

WASHINGTON, D.C.—The U.S. Chamber of Commerce’s Center for Capital Markets Competitiveness released today a report that outlines concrete ideas for modernizing the U.S. Securities and Exchange Commission’s (SEC) disclosure regime. The “Report on Corporate Disclosure Effectiveness: Ensuring a Balanced System that Informs and Protects Investors and Facilitates Capital Formation,” identifies short- and long-term improvements to enhance the utility and value of disclosure documents.

Some of the near-term improvements identified by the Chamber report include addressing specific reporting requirements that are obsolete or duplicative of other disclosures. The CCMC also suggests longer-term improvements, including addressing the general problem of duplication among SEC filings, modernizing the presentation and delivery of public company reports, and reforming disclosures for Compensation Discussion & Analysis (CD&A) as well as Management Discussion & Analysis (MD&A).

“The CCMC has long supported effective communication between companies and investors, but unfortunately our current public company disclosures regime is the result of a 1930’s style system that sometimes fails to meet the needs of the 21st century investor and businesses,” said David Hirschmann, president and CEO of the CCMC. “The SEC should be applauded for prioritizing disclosure reform as part of the agency’s agenda, and we hope that the recommendations included in this report will help inform the SEC, as well as all stakeholders, on this important project as it moves forward. While we may not have all of the answers, this report is a good place to start. Ensuring that investors are provided with the material information they need to make informed investment and voting decisions is a critical step towards keeping the American capital markets competitive in the 21st century.”

In the Spring of 2014, the CCMC began a number of meetings and interviews with various stakeholders to generate ideas for enhancing the effectiveness of disclosure. The report released today is a compilation of these discussions. The CCMC will continue to engage in such dialogue as this important priority moves forward at the SEC.

“There is no reason to delay enacting the near-term improvements while the second category of reforms continues to be studied and analyzed,” the report notes. “The near-term improvements would achieve meaningful progress that benefits investors and our capital markets, and we encourage the SEC to move these reforms forward at this time.

“The SEC has the opportunity to enhance the effectiveness of the public company disclosure regime by modernizing the regime for the 21st century. While we believe it is appropriate for disclosure requirements to evolve, it also is important that they do so in a manner that retains the focus on information that is important to an investor’s ability to understand and evaluate a business.

“We look forward to continuing to collaborate with the SEC and others in the SEC’s disclosure reform efforts so that we end up with a disclosure regime that is optimal for investors overall – a regime that provides investors with the material information they need to make informed investment and voting decisions and fosters capital formation and economic growth.”

Since its inception in 2007, the Center for Capital Markets Competitiveness has led a bipartisan effort to modernize and strengthen the outmoded regulatory systems that have governed our capital markets. The CCMC is committed to working aggressively with the administration, Congress, and global leaders to implement reforms to strengthen the economy, restore investor confidence, and ensure well-functioning capital markets.

The U.S. Chamber of Commerce is the world’s largest business federation representing the interests of more than 3 million businesses of all sizes, sectors, and regions, as well as state and local chambers and industry associations.