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U.S. Securities and Exchange Commission

Speech by SEC Commissioner:
Statement at Open Meeting to Adopt Amendments Regarding Proxy Disclosure Enhancements


Commissioner Troy A. Paredes

U.S. Securities and Exchange Commission

Washington, D.C.
December 16, 2009

Thank you, Chairman Schapiro.

Disclosure is the cornerstone of the federal securities laws. Consistent with the disclosure philosophy that animates federal securities regulation, the rule amendments we are poised to adopt will provide investors with useful information when making decisions without forcing a one-size-fits-all approach to governance or compensation on diverse public companies. Accordingly, I support the disclosure enhancements before the Commission today.

I would like to offer two general observations that flow from the rulemaking.

First, a chief concern behind the new disclosures is that companies may take excessive risks. While lawmakers should acknowledge the prospect of excessive risk taking, we also must recognize that companies can take too few risks. Undue emphasis on reducing the likelihood of bad outcomes can be costly if it leads to excessive conservatism. A dynamic and innovative economy that offers an ever-expanding mix of entrepreneurial and investment opportunities depends on the willingness and ability of enterprises to take risks.

Second, as disclosure obligations mount, we need to consider the impact on investors of being presented with more and more information to work through when making decisions. Even as we add new disclosure requirements today, it is important to consider whether other mandated disclosures should be more narrowly focused or otherwise scaled backed if they are no longer sufficiently useful to investor decision making. It may be better, for example, for investors to have shorter, more manageable prospectuses, proxy statements, and quarterly and annual reports that contain more targeted information and less duplication instead of lengthy documents that investors do not fully digest. I encourage the Division of Corporation Finance to continue evaluating our mandatory disclosure requirements to ensure that we require the proper set of disclosures, recognizing that more information is not always better than less.

In closing, I would like to join my colleagues in thanking the members of the staff from the Division of Corporation Finance, the Division of Risk, Strategy, and Financial Innovation, the Division of Investment Management, and the Office of the General Counsel who have worked diligently on these rule amendments. Thank you for your efforts.



Modified: 12/16/2009