Disclosure Reform — The SEC is Riding Off in Two Directions at Once

The Securities and Exchange Commission (SEC) is being buffeted by diametrically opposing forces with regard to disclosure policy rulemaking. The Dodd-Frank Act of 2010 required the SEC to pass rules to compel public companies to make disclosures about conflict minerals, mine safety and certain payments to foreign governments, all for the purpose of advancing societal goals. Proponents of sustainability metrics have been urging the SEC to adopt standards relating to environmental and other similar matters, and a petition on disclosure of corporate contributions and lobbying expenses by public companies would involve the SEC in another political quagmire. Yet, the SEC is also being pressured by forces that would deregulate disclosure mandates and some such deregulatory measures were included in the JOBS Act of 2012. Also, the SEC has embarked on its own initiative for streamlining disclosure obligations. This article discusses these conflicting disclosure initiatives and some of the current academic papers and theories with regard to SEC disclosure policy. I suggest a few possible ways for the SEC to move forward, including scaled and tiered disclosure.