The U.S. SEC proposed to adjust the regular disclosure system for listed companies, but this reform became subject to a new procedural controversy following inconsistencies in the single plural in the e-mails for comments. There are concerns that some of the public feedback may not be properly recorded or made public, thereby affecting the advancement of the rule.
There's been a disagreement over the e-mail.
The Commission introduced new regulations in May to allow listed companies to disclose financial results on a semi-annual basis instead of maintaining the current quarterly disclosure arrangements. However, during the consultation process, two different mailboxes appeared in the open materials: rule-comment@sec.gov and rule-comments@sec.gov.
Better Markets, a non-profit investor advocacy agency, wrote to SEC Chairman Paul Atkins this week, and two members of the Commission, saying that errors in the mailboxes listed on the public page could deprive some members of the public of the opportunity to present their views. It also cited several sources, stating that feedback sent to odd mailboxes did not appear on the SEC web comment page.
In response, the SEC stated that both mailboxes were valid and could be used to submit public opinion on the rule. The speaker said that the body had received a great deal of feedback and that comments were still being uploaded.
Half-yearly disclosure of proposals is not too strong.
The proposal was submitted on 5 May and published in the Federal Gazette on 7 May. Under the programme, an enterprise may choose to submit a new six-monthly report 10-S and replace the existing three quarters 10-Q and one year 10-K with an annual report.
Atkins had previously indicated that the quarterly disclosure system was too rigid, limiting the scope for companies and investors to judge the frequency of disclosure. However, in the light of the public comments that have been made, there is no broad support for this reform, and the main concern of the opponents is that the information available to the diaspora will be reduced.
New focus on compliance
The point of the dispute was not just whether the mailbox was wrong, but whether it would affect the SEC ' s rule-making process. Under the U.S. Administrative Procedure Act, regulators need to review and respond to important comments received during the consultation period when they develop or modify rules, and public comments are usually made public.
Better Markets argued that if some of the comments were not received, processed or made public, there might be a gap in the rules record, which would weaken the SEC ' s legal defence capacity. The Agency requested the SEC to correct the records of the Federal Gazette, reopen the consultation period for this rule and remind the author to verify that his opinion had been successfully delivered.
Amanda Fischer, the agency ' s policy manager, stated that the specific reasons for the problem could not be fully proven by the outside world at the present time, but that, in the light of the public information, it seemed like a post office box error. She also mentioned that in 2021 and 2022, the SEC had reopened several rule review periods due to technical problems.
Most of the comments made publicly were objections
Better Markets estimated that approximately 99 per cent of the comments were against the half-yearly disclosure proposal. Fischer also states that the number of comments published by the SEC now exceeds 66,000, but the total amount actually received may be higher.
Currently, the SEC continues to upload comments on the official web and the submitters are advised to search for their own confirmations if they are shown. If follow-up does not prove that all valid comments have been reviewed, the controversy surrounding half-yearly disclosure reforms may further escalate from policy differences to procedural legality.