SEC in disclosure reform push
This week the US Securities and Exchange Commission (SEC) Chair Paul Atkins issued a statement expanding a review of Regulation S-K, calling for public comment by 13 April 2026. The aim is to streamline disclosure requirements to increase relevance and avoid “clutter”.
Atkins argued that the current disclosure regime often overwhelms stakeholders with immaterial data, obscuring what truly matters. Quoting Justice Thurgood Marshall’s opinion in TSC Industries v. Northway, he warned against “burying shareholders in an avalanche of immaterial information” and stressed the need to help investors “separate the wheat from the chaff.”
This initiative builds on earlier reforms, including a roundtable and consultation on executive compensation disclosure. Now the SEC is turning to broader Regulation S-K content, with a focus on materiality and usefulness for investor decision-making.
Our view? If companies do not consider a disclosure material, then they should not be making it. There are reams of guidance from the SEC, accounting standards setters and other regulators internationally that help companies determine what is material for their investors. Equally, companies can and should be criticised, or prevented, from publishing “boilerplate” disclosures that add no informational value. It’s easier than ever to identify them.
That said, we might respectfully point out that the TSC Industries v. Northway case was decided in 1976 and there have been just a few changes since that time. Since the early 2000s institutional investors with the budget to either buy fundamental data or (for those with extremely deep pockets) develop their own independent holdings, have had access to third-party tagged information that let’s them instantly filter reports to capture exactly what they need, no matter how much data is disclosed.
With curation, backtesting and extensive review, sophisticated investment houses gain sufficient confidence in the way that these data holdings perform that they can automate certain kinds of trading decisions. That means that no human in those firms ever looks at the reports provided by the company. But those reports still drive many kinds of trade: a machine has accurate information to hand, instantly weighs it against other factors (weather events, economic confidence, peer company performance) and trades are executed a fraction of a second after that data is available. In the United States, since 2011, a significant amount of this information has been subject to the US SEC obligation to tag and file structured XBRL (and more recently, Inline XBRL) reports, meaning that investors of all kinds, not just the sophisticated ones, as well as regulators, academia and other users can adopt similar techniques and filter out exactly what they want from the disclosures
In an era in which well-run companies have more control over more data than has ever before been even imaginable, it’s important that an ongoing stocktake about what information should be disclosed to markets is carried out. However, in our view the idea that investors are subject to “information overload” in a digital era, doesn’t seem to reflect current market conditions or technologies. Of course, we would point out that alpha asymmetries could be improved if the Management Discussion & Analysis, Risk Factors and a range of other “Reg S-K” disclosures were tagged. In terms of quarterly and annual reports in the United States, it is only the “Reg S-X” financial statements that are tagged by companies today. Arguably that provides a baked-in information advantage to the largest investors.
Read Chair Atkins’ statement and find how to share your thoughts on the reform here.
