On Monday, the SEC submitted a proposal to OIRA titled “Electronic Delivery of Information Under the Federal Securities Laws.” While the document itself isn’t publicly available (and this proposal wasn’t on the latest Reg Flex Agenda), recent speeches have suggested that the SEC Staff was working on rulemaking along these lines. For example, as this Reed Smith blog notes, in testimony before the House Financial Services Committee and the Senate Committee on Banking, Housing, and Urban Affairs in February, Chairman Paul Atkins “said the agency is examining recordkeeping expectations for digital communications and ways to increase flexibility around electronic delivery of shareholder and investor materials.” At SEC Speaks in March, he continued the discussion:

As just one example of the gulf between regulation and reality, our rules still default to paper delivery for shareholder communications. In an age of algorithmic trading and artificial intelligence, I believe that requirement ought to be a relic, not a standard.

In fact, not long after the first SEC Speaks in the seventies, the late SEC Commissioner Roberta Karmel observed that “data analyzing technology has progressed to a point of magnitude superior to that available just brief years ago.” Commissioner Karmel added—around the advent of the word processor, mind you—that “although these developments have augmented the complexity and efficiency of the private financial sector, the SEC has not enjoyed all the benefits of this improved technology.” Her words were at once a warning and an enduring appeal for financial regulators to do a better job at keeping pace. We are resolved to answer that call by refusing to remain tethered to the tools or the temperament of a bygone era.

Commissioner Peirce and Brian Daly, Director of the Division of Investment Management, have suggested (subject to the standard disclaimer) in speeches at the Investment Company Institute (ICI) Investment Management Conference and ICI Winter Board Meeting, respectively, that the SEC eventually consider going 10 steps further than just making electronic delivery the default. These speeches focused on fund disclosure documents, but their descriptions of ways fund disclosures might become “interactive and personalized” are fascinating. 

– Meredith Ervine