SEC “DISCLOSURE EFFECTIVENESS” INITIATIVE RAISES CONCERNSBy
Securities & Exchange Commission proposals to reduce corporate financial disclosures have run into heavy opposition from public interest, consumer, and other groups, and they aren’t exactly being welcomed with open arms by corporate issuers. “We would be very concerned if this proposal, which is put forward as technical, results in reduction in disclosure of interest to particular investors and other users if those individuals and institutions do not have the appropriate opportunity to fully evaluate what is being eliminated,” says Jeffrey P. Mahoney, general counsel of the Council of Institutional Investors.
Tom Quaadman, executive vice president of the Center for Capital Markets Competitiveness at the U.S. Chamber of Commerce, has concerns with several aspects of the proposal but is generally supportive of the effort. One of his issues is that the streamlined disclosure rules could move information from the management’s discussion and analysis (MD&A) section of a regulatory filing to the financial statements and their accompanying footnotes. “We are concerned that the relocation of the information could establish audit requirements where none existed before, subject the information to additional internal control requirements or the rules for tagging information in XBRL,” he explains.