U.S. Sen. Mike Rounds (R-SD) introduced a bill that would amend the type of information that public companies must disclose.
The bill — Mandatory Materiality Requirement Act (S.5005) – would amend the Securities Act of 1933 to say that information disclosed to the Securities and Exchange Commission by issuers must be material to investors of those issuers. Specifically, it would require the SEC to determine that “there is a substantial likelihood that a reasonable investor of the issuer would consider the information…to be important with respect to an investment decision regarding the issuer” when imposing a new disclosure obligation.
“American businesses should not be used as a gateway to advance climate change policy,” Rounds said. “The heavy hand of government is hampering the growth of our businesses and economy. This legislation would seek to prevent the SEC from requiring reporting of unnecessary information and instead focus on protecting investors, maintaining fair and efficient markets, and facilitating capital formation.”
This past March, the SEC issued a rule requiring any public company to disclose its direct and indirect greenhouse gas emissions, even if that information isn’t relevant to investors. Rounds said this information would potentially limit access to capital, discourage new companies from going public and result in onerous reporting requirements.
Along with Rounds, the bill is cosponsored by Sens. Cynthia Lummis (R-WY), Thom Tillis (R-NC), Bill Hagerty (R-TN), John Boozman (R-AR), Steve Daines (R-MT), Chuck Grassley (R-IA), and Dan Sullivan (R-AK).