SEC Looking to Simplify Disclosure Rules to Minimize “Information Overload” for Investors

The Securities and Exchange Commission will review corporate disclosure rules to possibly get rid of disclosure rules that are creating “information overload” for investors. Speaking to the National Association of Corporate Directors, SEC Chairwoman Mary Jo White said that as the quantity and types of issues that companies have to disclose become greater and “more detailed,” she wonders whether investors need or benefit from all that information-or if ‘information overload’ makes it hard for customers to glean what they should know to make the best investment choices for them.

Commission rules, company efforts, and congressional mandates seeking to prevent lawsuits are what have led to such extensive disclosures. Now, the SEC may consider a possible overhaul after a study of company filing-rules, which was mandated by the 2012 Jumpstart Our Business Startups Act, is released. The JOBS Act mandates that the regulator figure out how to simplify rules for smaller companies.

White said that certain disclosure details are no longer necessary in the wake of such information that is now widely available online, including via social media. She pointed to examples of information being disclosed that may not be as relevant now as before, such as the ratio of earnings to fixed charges or dilution disclosure requirements. White also spoke about how it might be prudent to begin getting certain information to investors sooner than what current rules and forms mandate for timeframes or whether this could become an added burden to companies.

Securities Fraud
Unfortunately, investors may find that they were persuaded into making investments that were unsuitable for their financial goals or inappropriate for how much risk their bank accounts could handle. Even when providing disclosures to investors, financial representatives, brokers, investment advisers, and brokerage firms must make sure that customers understand not just what they are investing in but also what the information they were given means.

If you believe that your investment losses were a result of poor investment advice you were given by your financial representative or due to broker misconduct, please contact our securities fraud law firm today.

SEC eyes ‘information overload’ in firms’ filings, USA Today, October 15, 2013

SEC Looks to Cut ‘Information Overload’ in Filings, White Says, Bloomberg, October 15, 2013

National Association of Corporate Directors

More Blog Posts:
Puerto Rican Bond Crisis Places Oppenheimer Funds at Risk, Institutional Investor Securities Blog, October 15, 2013

SEC Focuses More Attention On Accounting Fraud, Variable Annuities, & Market-Maker Risk, Stockbroker Fraud Blog, June 26, 2013

FINRA Arbitration Panel Awards Ex-Wedbush Securities Broker $4.2M Against the Firm, Institutional Investor Securities Blog, October 4, 2013