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Statement at Open Meeting on Disclosure Update and Simplification

Commissioner Michael S. Piwowar

July 13, 2016

Thank you, Chair White, and thank you to all of our staff members who have worked on this proposal to amend or remove disclosure requirements that are redundant, duplicative, or outdated.

Updating our regulations to remove overlapping or superseded provisions is unlikely to be viewed as cutting-edge, headline-grabbing work. But let that not be a reason to understate the importance of this proposal. Like failing to perform routine maintenance on your car, a regulatory rulebook that is bloated with redundant and outdated requirements is inefficient and needlessly increases costs for everyone.

My predecessor, former Commissioner Troy Paredes, wrote that an effective disclosure-based regulator regime needs two things to be effective: first, information must be disclosed and, second, users of the information need to use that information effectively.[1] The second point is often overlooked. Information overload can cause investors to get overwhelmed or distracted. How can we assist investors with investment decisions if they refuse to review the disclosure because it is too lengthy, overly complex, or filled with marginally useful information?[2]

The data backs up this point. In 2008, our staff conducted a survey of retail investors.[3] More than half of investors responded that they rarely, very rarely, or never read corporate annual reports.[4] Some of the top reasons for not reading annual reports were that they were too complicated or hard to understand, that they were too long and wordy, and that investors were too busy and had no time.[5]

Our ongoing disclosure effectiveness project is not unlike the Consumer Financial Protection Bureau’s 2011 initiative to combine mortgage disclosures. The Bureau noted that consumers received two separate disclosure documents — one under the federal Truth in Lending Act and one under the Real Estate Settlement Procedures Act. While the two forms were meant to be helpful, they had overlapping information and used complicated terms. Moreover, the forms were redundant and costly for lenders to fill out.[6]

I support today’s proposal and have no questions. Thank you.

[1] Troy A. Paredes, Blinded by the Light: Information Overload and Its Consequences for Securities Regulation, 81 Wash. U. L. Q. 417 (2003).

[2] See Troy A. Paredes, Remarks at The SEC Speaks in 2013 (Feb. 22, 2013), available at

[3] Office of Investor Education and Advocacy, Mandatory Disclosure Documents Telephone Survey (July 30, 2008), available at

[4] Id. at 12.

[5] Id. at 14.

[6] Consumer Financial Protection Bureau, CFPB Announces Initiative to Combine Mortgage Loan Disclosures (May 18, 2011), available at

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