Request for Rulemaking to Amend Rule 1-02(w) under Regulation S-X to require complete disclosure of all subsidiaries for filers of Form 10-K, regardless of the size of the subsidiary
Scott H. Schulke
Jonathan G. Katz
re: Rulemaking Request from the General Public, Rule 192 (17 CFR 201.192)
Dear Mr. Katz:
I am submitting this petition for a new rule to require complete disclosure of all subsidiaries for filers of Form 10-K, regardless of the size of the subsidiary. Currently, many firms filing Form 10-K are permitted to list only those subsidiaries that meet the "significant subsidiary" definition under 17 CFR 210.1-02(w) used in Regulation S-X. This existing standard does not provide adequate transparency for informed investment decisions.
Disclosure of all subsidiaries, by name and principal jurisdiction of operation, will allow investors, as well as regulators, journalists, and legislators the ability to clearly and quickly identify activities of a firm's operating entities in the news and through the Internet. Full disclosure of subsidiaries will help investors better monitor and understand the level of exposure companies have to potential changes in the legal, economic, social and environmental conditions affecting business profitability in any given jurisdiction.
The existing "significant subsidiaries" disclosure rule doesn't satisfy the general standard of presenting all materially relevant activity that an average, prudent investor ought reasonably to be informed about. I realized the need for this reform while working at a financial newswire that covers SEC documents. If adopted, this disclosure will improve the functioning of the securities markets of the United States.
Thank you for your consideration.