If you’ve been reading our posts (and probably even if you haven’t), you should know by now that the SEC has launched a “disclosure effectiveness” initiative and has already taken actions to make some disclosures more “effective”. One such action was the publication of a 341-page “concept” release asking hundreds of questions about whether and how to address a wide range of disclosure issues. More recently, the SEC has proposed rule changes that would eliminate some particularly pesky disclosure burdens.
I certainly appreciate the SEC’s efforts in this area (even if Senator Elizabeth Warren does not). However, one major area that the SEC has not discussed very much is the means by which companies make disclosures – i.e., EDGAR, or more broadly, whether and how disclosures should move into the 21st Century. In meetings and other forums convened to discuss disclosure effectiveness, I and others have asked about the ongoing EDGAR reauthorization project, because increasingly how we disclose has a tremendous impact on what we disclose. To my knowledge, the SEC has simply reported that the reauthorization process is going on; no other details have been provided. (By the way — EDGAR went live in 1995; hence the title of this post.)
Now, thanks to my friend Broc Romanek, I learned that Commissioner Kara Stein made a speech in May that speaks to me loud and clear. The speech was entitled “Disclosure in the Digital Age: Time for New Revolution,” and it’s terrific. There are times when I haven’t agreed with Commissioner Stein – for example, when she said that adopting a universal proxy card should be the most important thing on the SEC’s agenda – and in fact there are some things in this speech with which I disagree. However, in general, she’s spot on this time in asking how we can better determine what investors want to know and how companies can deliver that information.
The speech (excluding footnotes) is a grand total of five pages – another achievement from an agency that tends to issue doorstops in the form of rule proposals and concept releases. Read it.