Legislation requiring the Securities and Exchange Commission to create new rules on making investment disclosures electronically was introduced in the House on Monday.
U.S. Rep. Bill Huizenga (R-MI), vice chair of the House Committee on Financial Services introduced the bipartisan Improving Disclosure for Investors Act. U.S. Reps Brad Sherman (D-CA); Bryan Steil (R-WI) and Jake Auchincloss (D-MA) co-sponsored the legislation. The bill would require the SEC to engage in rulemaking that would allow registered investment companies to satisfy their regulatory requirements to disclose information to investors using electronic delivery methods.
“The Improving Disclosure for Investors Act is designed to modernize disclosure requirements, building on President Trump’s efforts to make our financial system more efficient and inclusive” Huizenga said. “Continuing to send customers paper disclosure notices is not only wasteful but fails to acknowledge that digital communications are safer and more effective in reaching all Americans. I look forward to working with my colleagues in the House as well as the Securities and Exchange Commission to finally make this a reality.”
Currently, the delivery of some documents under federal securities laws is permitted by the SEC to be done electronically. However, the delivery is subject to requirements that a registrant provide notice the information is available electronically, that the investor has effective access to the information and that the registrant obtains evidence to show actual deliver or obtains informed consent from the investor, such as through an opt-in requirement. Officials said this framework has not been updated for more than 20 years.
In 2023, the SEC introduced a proposal that would require electronic submissions for nearly all forms, filings and other material. Officials said this move highlighted the need for a more digitized reporting system.
The legislation was previously introduced into the 118th Congress and was passed with a vote of 269-153.