SEC Corporation Finance Director Higgins Discusses Disclosure Requirements

SEC Director of the Division of Corporation Finance ("Division") Keith Higgins delivered remarks before the George A. Leet Business Law Conference. He discussed SEC disclosure requirements and shared ideas on the future of disclosure.

Mr. Higgins discussed the origin of disclosure requirements through the enactments of the Securities Act and Securities Exchange Act. He explained that two separate disclosure regimes emerged with often overlapping and duplicative requirements. According to Mr. Higgins, the goal of the Division's Disclosure Effectiveness agenda today is to recommend to the SEC rule changes, principally to Regulation S-K and Regulation S-X, "to update and modernize specific disclosure requirements, to eliminate duplicative requirements, and to continue to provide material information."

He stated that while reducing the volume of disclosure is not the Division's objective, he wants to be sure to "put better disclosure into the hands of investors."

Some considerations regarding company disclosure that Mr. Higgins mentioned include:

• whether the $75 million in public float is the appropriate threshold for smaller reporting companies;
• modernizing the current set of Industry Guides – whether as separate guides or as codifications in Regulation S-K – to reflect the changing company landscape; and
• reducing redundancy in company filings, particularly in the overlap of disclosure requirements in Regulation S-K and GAAP.

Additionally, Mr. Higgins encouraged companies to experiment with the presentation of their periodic reports, reduce duplication and eliminate "stale," outdated, not required information.

He also discussed the role that technology can play in how investors access company information, stating that the adoption of EDGAR two decades ago has significantly transformed the disclosure system, but the process of making information accessible to investors must be updated.

Mr. Higgins concluded by encouraging market participants to submit research about company disclosure to help the SEC further inform its understanding of disclosure needs.

See: Mr. Higgins' Speech. Related news: SEC Division of Corporate Finance Director Higgins Delivers Remarks on Disclosure Effectiveness (with Lofchie Comment) (April 11, 2014).