SEC Commissioner Voices Dissent regarding Final Rules Simplifying Disclosure Requirements

SEC Commissioner Robert Jackson Jr. dissented from the agency's final rules simplifying disclosure requirements. Mr. Jackson Jr. said that the rule reverses the SEC staff's recommendation that firms disclose a "clear identifier of their corporate entities." He also noted that the rule removes the SEC staff's role as "gatekeepers when companies redact information from disclosures."

Mr. Jackson Jr. stated that the financial crisis taught regulators that the complexity of firms' structures made it difficult to identify the corporate entities responsible for risktaking. He further said that to foster the use of legal entity identifiers ("LEIs"), the SEC has long advocated for rules mandating firms who adopt LEIs to disclose them. The majority, according to Mr. Jackson Jr., "abandons those requirements," and he disagreed with the view that disclosing LEIs will be burdensome and costly.

In addition, Mr. Jackson Jr. described the rule's treatment of redactions from confidential filings as "troubling." The final rule eliminates the requirement that firms consult with SEC staff before redacting their filings and the obligation that companies must give SEC staff the materials that they choose to redact. He warned that if more firms decide to not obtain LEIs, LEIs will become "less useful" and the ensuing risks will result in substantial capital costs for all companies.