U.S. Sens. Thom Tillis (R-NC) and John Hickenlooper (D-CO) have teamed up to sponsor a bill that would allow for the electronic delivery of regulatory documents to investors.
Currently, the Securities and Exchange Commission (SEC) permits electronic delivery of only certain documents. However, electronic delivery is subject to requirements that a registrant provides notice that the information is available electronically, the investor has adequate access to such information, and the registrant either obtains evidence to show actual delivery or obtains informed consent from the investor. The SEC has not comprehensively updated this framework in over 20 years.
The Improving Disclosure for Investors Act of 2024 would require the SEC to establish a means for investors to opt out of electronic delivery at any time and receive paper documents. This would, in effect, make electronic delivery the default option.
“U.S capital markets have embraced the digital age and rely on far less paper now than they did 20 years ago, and it is past time that we bring disclosure requirements into the 21st century,” Tillis said. “This commonsense legislation will heighten efficiency and cut down on paper while preserving investors’ ability to receive hard copies.”
Hickenlooper added that a major part of cutting red tape is to go paperless.
The bill has the support of some major investment firms, including Fidelity and Schwab.
“In the 21st century American investors deserve a more engaging, secure, and timely standard to receive information in line with digital-first policies at the Department of Labor, Thrift Savings Plan, Social Security Administration, and Internal Revenue Service,” Fidelity officials said.
Schwab officials said this move is long overdue.
“Default e-delivery is long-overdue, as a large majority of investors prefer the speed and convenience of receiving documents electronically. E-delivery allows Schwab to deliver our products at lower cost, avoids waste, and is environmentally friendly,” Schwab officials said.
Industry groups, SIFMA and the Investment Company Institute also support the legislation.
“While the bill contains provisions to allow those that prefer to receive paper statements to continue to do so, this is a big step forward in not only modernizing information delivery but recognizing the need to reduce the use of paper. ICI applauds Senators Hickenlooper and Tillis for furthering this legislation in the interest of investors. Their leadership in enhancing the retail investment experience will make US capital markets even stronger,” ICI CEO and President Eric Pan said.
SIFMA officials added that survey results show that a large majority of retail investors want e-delivery for its environmental benefits, speed, and convenience.
“This important bipartisan legislation is the natural next step in modernizing the SEC’s framework in light of changing investor preferences and technology,” SIFMA officials said.