Disclosure is at the heart of the US securities regulatory regime. Providing salient information to investors is key to ensuring decisions are based on recent, accurate data. Yet, over the years, the number of rules and compliance requirements has expanded, adding high cost to the process – a price that is inevitably paid by the company in question and hence shareholders. Information can range from helpful to the arcane to useless. And frequently, the disclosure documents are created by attorneys for other lawyers in a cycle that supports the legal industry more than investors.
Under the current leadership of the Securities and Exchange Commission, the regulator is trying to move back to its mission of providing valuable information and away from political and nonsensical requirements. In a statement issued yesterday, the SEC said it was seeking to reduce reporting requirements without affecting access to relevant information. The proposal would impact registered investment companies to report portfolio-related information.
“Reducing unnecessary reporting burdens and increasing efficiency in disclosure requirements is a top priority of the Commission,” said SEC Chairman Paul S. Atkins.
The possible changes to Form N-PORT, a mandatory SEC filing form used by most registered investment companies, include:
- Provide reporting funds with an additional 15 days to file monthly reports of portfolio-related information on Form N-PORT, which is designed to reduce the potential for errors and resubmissions
- Reduce the publication of reports from monthly to quarterly, a change designed to protect a fund’s shareholders by reducing the risks of more frequent public disclosure, such as external parties using information about a fund’s portfolio holdings in ways that increase costs for the fund and its shareholders
- Modify Form N-PORT reports to streamline or remove certain reported information, including removing “Names Rule” reporting, and add information about funds with share classes that operate as exchange-traded funds
The public comment period on the proposal will remain open until 60 days after the Federal Register publication date.
