SEC Proposes Regulation Allowing Electronic Delivery of Information to Be the Default 

The SEC proposed "Regulation E-Delivery," which would allow regulated entities to make electronic delivery their default method of disseminating information. Customers would have the ability to opt out of e-delivery and receive paper free of charge.

This would be a binding rule that reverses the current guidance stating that paper is the default method of delivery. The SEC said the change would be available to broker-dealers, investment advisers, mutual funds and ETFs, firms that send proxy materials, and transfer agents, among others. 

The rule would establish two methods of delivery: (i) if the document does not contain personal financial information, a firm could email the recipient directly, and (ii) if the document contains personal financial information, the firm could send an email with a secure link and the recipient would log in to view the document. The document would have to remain available through the link for a minimum period. Firms would be required to have written procedures to catch bounced or failed emails.

The proposal would also rescind ICA Rule 30e-3 (Internet availability of reports to shareholders) on fund shareholder reports and amend the proxy and tender-offer rules.

SIFMA President and CEO Kenneth Bentsen said the proposal is an important step toward aligning the rules with how investors access information today while letting them choose paper if they prefer. Mr. Bentsen said SIFMA had long argued for making e-delivery the default to reduce costs and paper consumption, as well as to improve the timeliness and accessibility of disclosures.

The deadline for comment is awaiting publication in the Federal Register.