NATIONAL HARBOR, Md. Oct 15 (Reuters) - U.S. regulators should review the federal rules governing how public companies disclose financial data to ensure investors don’t suffer from “information overload,” the top U.S. securities regulator said Tuesday.
“I am raising the question ... as to whether investors need and are optimally served by the detailed and lengthy disclosures about all of the topics that companies currently provide in the reports they are required to prepare and file with us,” Securities and Exchange Commission Chairwoman Mary Jo White said in a speech before the National Association of Corporate Directors.
“We must continuously consider whether information overload is occurring as rules proliferate and as we contemplate what should and should not be required to be disclosed going forward.”
White’s comments come as the SEC works to complete a study of the financial reporting rules for all public companies to see if changes are warranted. That regulatory regime, known as Regulation SK, requires companies going public to register their shares and routinely disclose financial results, material facts about the company, as well as other information.
The study is required by a 2012 law that relaxes securities regulations to help smaller emerging companies go public and raise additional capital.
Although the bulk of the law is geared toward helping small business growth, the inclusion of the study signaled that Congress wanted the SEC to look beyond small companies and consider the rules for all public companies.
White said Tuesday she expects the results of the study will be made public “very soon.”
She added that the study will only be the first step toward a broader review of the reporting requirements.
Among the questions she said the SEC should ask include “whether there are specific disclosure requirements that are simply not necessary for investors or that investors do not want.”
As an example, she noted that requirements for dilution disclosure or the ratio of earnings to fixed charges may not be as relevant today as they once were.