SEC set to act on ‘information overload’

Mary Jo White heads the Securities and Exchange Commission.
Chip Somodevilla/Getty Images/File 2013
Mary Jo White heads the Securities and Exchange Commission.

WASHINGTON — The chairwoman of the Securities and Exchange Commission, Mary Jo White, said Tuesday that the agency will review corporate disclosure rules to root out requirements that may be causing ‘‘information overload’’ for investors.

SEC rules, congressional mandates, and company efforts to protect against litigation have led to lengthy disclosures that can make it difficult to find the content that is most relevant to people making investment decisions, White said in a speech in Oxon Hill, Md.

‘‘We must continuously consider whether information overload is occurring as rules proliferate and as we contemplate what should and should not be required,’’ White said in her prepared remarks for the National Association of Corporate Directors annual conference.


The SEC will take a step toward a potential overhaul with the release of a study of company-filing rules that will come soon, White said. The study was mandated by the 2012 Jumpstart Our Business Startups Act, which requires the agency to look for ways to simplify rules for smaller companies.

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White’s comments probably will be applauded by public companies, said Hillary A. Sale, a professor of law and management at Washington University in St. Louis. On the other hand, institutional investors and stock analysts find value in some of the information the SEC may move to eliminate.

‘‘Not every individual investor reads every report a company issues, but individual investors rarely move the market,’’ Sale said. ‘‘People who make the largest buy-and-sell decisions are either activist investors or hedge funds or institutional investors, and they do read and digest this information and use it. The other group of people who use this are the analysts who make buy-and-sell and hold recommendations.’’

The widespread availability of information on the Internet has made some disclosure details potentially unnecessary, White said, citing forms that require companies to list historical share prices.

The ability to share information almost instantly, via social media and other tools, also may call into question the deadlines for disclosing material information such as the buying and selling of stock by directors, officers, and beneficial owners, White said.


Reports also have grown longer because businesses have become more defensive against potential lawsuits, White said. Companies may overwhelm investors with excessive ‘‘cautionary language’’ in the ‘‘Risk Factors’’ annual reports, she said.

White also said the SEC has issued guidance on about when to disclose cyber-security intrusions. ‘‘We’ll be monitoring very closely to see if a rulemaking step is necessary or desirable,’’ White said.

White is a former director of Nasdaq OMX Group, said the SEC expects to issue a proposal to authorize equity crowd-funding ‘‘quite soon.’’