Thursday, October 4, 2018

SEC Disclosure Update and Simplification

Kudos to the SEC for adopting amendments to update and simplify some of its disclosure requirements that had become "redundant, duplicative, overlapping, outdated, or superseded."

It's unclear if that description of the need for amendments was intended as a joke by the SEC staff or was just a very comprehensive description of the requirements being amended. Regardless, it reminded me of the episode of "Cheers" where Diane expressed concern to Frasier that Frasier had too often voiced suspicions that Sam was trying to woo Diane back. Frasier objects, exclaiming: "Oh, now you're saying that I'm redundant, that I repeat myself, that I say things over and over!"

The amendments, which become effective November 5, 2018, amend numerous disclosure requirements previous required by SEC rules and regulations, including those in Regulation S-K, Regulation S-X, Form S-1, Form S-3, Form 10-K, among many others.

I won't try to summarize the entire 314 page SEC release which is available here, but I did want to highlight my least favorite change. You may have noticed language in SEC filings instructing readers that they may access publicly filed documents at the SEC's Public Reference Room, such as:

"We file reports with the Securities and Exchange Commission ("SEC").  These reports include our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to these filings.  The public may read any of these filings at the SEC's Public Reference Room at 100 F Street, NE, Washington, DC  20549 on official business days during the hours of 10 a.m. and 3 p.m." 

Well, no more. The SEC has removed that disclosure requirement. It always brought a smile to my face to imagine a grumpy old man, perhaps wearing a mustache, a bow tie, and a three piece suit, taking a bus to the SEC's office building in Washington D.C. and pounding on the SEC's front door with the end of his cane demanding access to their Public Reference Room so that he could comb through his favorite company's 10-Ks and 10-Qs, only to be kicked out at 3:00 p.m., at which point he would shuffle back to the bus stop. Maybe he'd take a detour for some taffy or a cold sarsaparilla on his way home. How can this gentleman afford to be a direct investor in the US equity markets but he can't pay for a dial-up modem to access the SEC's EDGAR database online?


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