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 would respectfully point out that TSC Industries v. Northway was decided in 1976, and much has changed since then. Since the early 2000s, institutional investors with the budget to purchase fundamental data, or the resources to develop their own independent holdings, have had access to third-party tagged information (by which we mean that it has not been tagged by management) that regardless of the volume of hopefully material information disclosed, lets them instantly filter out of the entire reports exactly what they need.
With curation, backtesting and extensive review, sophisticated investment houses gain sufficient confidence in these data holdings to automate certain trading decisions. This means that no human in those firms looks at a new report provided by a company before pre-defined trading strategies are executed. Yet those reports drive millions of trades: a machine has accurate information instantly available, weighs it against other factors such as weather events, economic confidence and peer company performance, and executes trades a fraction of a second after the data becomes accessible. In the United States, since 2011, a significant amount of this information has been subject to the SEC’s obligation to tag and file structured XBRL reports, and more recently Inline XBRL reports. This means that investors of all kinds, not just sophisticated ones, as well as regulators, academics and other users, can adopt similar techniques and filter disclosures to extract exactly what they need.
In an era when well-run companies have more control over more data than was ever previously imaginable, it is important to conduct an ongoing review of what information should be disclosed to markets. However, the idea that investors are subject to “information overload” in a digital era does not, in our view, reflect current market conditions or technologies. We would also note that alpha asymmetries could be reduced if the Management Discussion and Analysis, Risk Factors (Ed: Earnings Releases!) and other Reg S-K disclosures were tagged. At present, only the Reg S-X financial statements in quarterly and annual reports are tagged by companies. This arguably provides a built-in information advantage to the largest investors.
Read Chair Atkins’ statement and find how to share your thoughts on the reform here.
