ICCR’s Letter to the SEC Regarding Regulation S-K
Late last week, ICCR submitted a comment letter [provide link here] to the SEC, responding to a request for comments regarding Regulation S-K, which governs non-financial disclosures in SEC filings. The current SEC leadership is planning a rule-making on Reg S-K, with the idea of significantly weakening the corporate disclosure regime.
Please see a link to download that full letter below.
In our letter, ICCR emphasized that the need for comprehensive mandatory disclosures remains critical to providing investors with the material information they need, both when purchasing and selling securities as well as in informing their voting decisions. We dispute the premise raised by SEC Chair Paul Atkins and others that too much regulation and disclosure have somehow contributed to a decline in IPOs, as there is ample evidence that the rapid growth of private markets and private financing is the primary driver.
Indeed, in today’s electronic environment, shareholders want more – not less – useful information in order to be able to analyze and evaluate their investments and performance pursuant to a broad array of factors, which for our members includes ESG-related principles. The ability to evaluate information is greatly enhanced with today’s tools, and the volume of information is readily accessible, with no significant impediments to access. This challenges the notion that there is “information overload.”
The question of “materiality” should not be defined by the government or by issuers, but rather by investors. As the U.S. Supreme Court stated 50 years ago, a fact is material “if there is a substantial likelihood that a reasonable shareholder would consider it important” in making an investment or voting decision. Investors continue to need and demand adequate corporate disclosures, including on issues of long-term value and sustainability, and a significant cutback of Regulation S-K disclosures would go against the wishes of the vast majority of investment fiduciaries.