SEC Launches Disclosure Study; Advisory Committee To Be Formed

Earlier today (June 24) the SEC announced the kickoff of its “21st Century Disclosure Initiative,” to study how information is obtained by the SEC from public companies, mutual funds, brokers and other regulated entities, and how it is made available to, and used, by investors and the markets.

The study will be led by Dr. William (Bill) Lutz, professor emeritus at Rutgers University. Lutz played a major role in the SEC’s Plain English initiative in the 1990s.

Besides the SEC’s Plain English Handbook, which Lutz had a significant role in developing, he is the author of numerous books and articles on the importance of plain language disclosures and avoiding doublespeak. (Some examples of Lutz’ work which I found also include his “39 Steps to Writing in Plain English” posted in 2005 by the Plain Language Association INternational (PLAIN), and “Life Under the Chief Doublespeak Officer” posted on a website called dt.org which appears to be a collection of various writings by various authors.)

The aim of 21st Century Disclosure Initiative, said the SEC, is “to outline the attributes of the disclosure system for the future that incorporates technology, the new ways in which investors get their information, and recent developments in how companies compile and report the information in their SEC-mandated disclosures.”

Blueprint Will be Published; Advisory Committee Will Be Formed
“The internal study will produce, by the end of 2008, a blueprint for future Commission action to improve the usefulness and timeliness of disclosure for investors,” stated the SEC. Additionally, the blueprint will aim to “streamline and modernize the collection of disclosure from companies and regulated entities.”

An advisory committee will be formed as part of this initiative, noted the SEC.

‘Fundamental Rethinking’ of Financial Disclosure; I.T. Key
“The study will be a fundamental rethinking of financial disclosure,” said the SEC, “beginning with the basic purposes of disclosure from the perspective of investors and markets.”

Information Technology (I.T.) will be a key aspect of the study, as the SEC notes: “Essential to the study will be the determination of how to match the capabilities of today’s information technology with the SEC’s regulatory aims and the needs of investors.”

All Existing SEC Forms, Reporting Requirements To Be Reviewed
The scope of the 21st Century Disclosure Initiative study, says the SEC, will include a review of:

• all existing SEC forms and reporting requirements,
  
• the manner in which information is provided to the Commission,
  
• with a special focus on needless redundancy.“
  

Additionally, the study will:

• consider various alternative strategic approaches to acquiring and publishing disclosure information
  
• consider ways that regulatory requirements for the collection of information might be tailored to get the best real-time distribution of financial and narrative disclosure to investors, and
  
• examine how best to integrate public disclosure with the SEC’s proposed new post-EDGAR architecture for investor search, assembly, and comparison of data.

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