2014 SEC Priorities in Focus: Disclosure Reforms

In his January 24, 2014 speechSecurities and Exchange Commission (“SEC”) Commissioner Daniel M. Gallagher stated that “two issues that…should be at the very top of the SEC’s agenda”, a “revamping” of the SEC’s corporate disclosure system and a series of “much needed reforms” for the proxy advising industries. In this blog post, we will summarize the primary points that Gallagher addressed in his speech about the first of these two issues: the topic of disclosure. In his speech, Commissioner Gallagher identified disclosure as the “bedrock premise” and “foundation” of federal securities law. That said, accurate disclosure of financial information by firms to their clients and to the public should be “core responsibilities” of all issuers, Gallagher conceded that an abundance of disclosure – provided in lengthy documents that primarily aim to avoid shareholder lawsuits, and do not communicate relevant information clearly – can also cause unintended consequences: “more disclosure…may not always yield better disclosure.”To this effect, Gallagher outlined a few “examples” of focus that the SEC may seek to pursue towards disclosure reform:

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