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Opening Statement on Request for Comment on Possible Revisions to Statistical and Other Disclosures Affecting Registrants in the Financial Services Industry

Acting Chairman Michael S. Piwowar

March 1, 2017

As Supreme Court Justice Louis Brandeis once wrote, “sunlight is said to be the best of disinfectants; electric light the most efficient policeman.”[1]  Yet lightbulbs must be replaced from time to time.  Sometimes the glow fades; other times, they simply break.  When we have the opportunity to replace with a bulb that is cheaper and more efficient, we should do so. Today, the Commission considers four staff recommendations, each of which seeks to focus the light of disclosure in ways that both empower investors to make independent and informed financial decisions and make regulation more efficient, effective and appropriately tailored. 

Today’s recommendations promote regulatory efficiency by streamlining, rationalizing, modernizing or eliminating duplicative regulatory burdens currently in effect under our existing rules and guidance.  I am very grateful to the staff for having helped to identify areas where the Commission can improve disclosure that serve the ends of both investor protection and the promotion of capital formation.

The first item on today’s agenda is a recommendation from the Division of Corporation Finance seeking issuance of a request for comment on Industry Guide 3, Statistical Disclosure by Bank Holding Companies (Guide 3).

Guide 3 was first published in 1976[2] as a convenient reference to the statistical disclosures sought by the staff in registration statements and other disclosure documents filed by bank holding companies.  The disclosures called for by Guide 3 were designed to provide detailed information about bank holding companies’ sources of income and exposure to risk.  The staff believed that disclosing consistent categories of statistical information on a periodic basis would assist investors to assess the future earnings potential of bank holding companies and would facilitate comparisons thereof.

As we all know, over the past four decades, the banking industry has undergone considerable evolution.  Today, bank holding companies and other registrants in the industry engage in a far broader array of activities than was the case in the mid-1970s.[3]  Despite such significant developments, the last substantive revisions to Guide 3 took place over 30 years ago.[4]  In light of the passage of time since the Commission last amended Guide 3, it is appropriate that we consider whether any modifications of Guide 3 might be in order.

When the Commission adopted its integrated disclosure system in 1982, one of the Commission’s goals was to revise or eliminate overlapping or unnecessary disclosure while at the same time ensuring that security holders, investors and the marketplace are provided with the requisite information to make informed investment and voting decisions.[5]  Today’s request for comment serves this objective by responding to a number of comment letters received in connection with the Commission’s April 2016 Regulation S-K concept release.[6]  A number of commenters on that release supported updating one or more of our Industry Guides, among them, Guide 3.  Significant overlaps between the information called for by Guide 3 and the requirements of U.S. GAAP were one of the most commonly cited reasons cited by commenters in favor of revisiting and modernizing Guide 3.[7]

Among other things, the request for comment we are considering today seeks public input on whether, how and to what extent aspects of Guide 3’s disclosures may be outdated or duplicative of or overlapping with other disclosure requirements. Moreover, the request seeks public input as to whether the scope and applicability of Guide 3 can be modernized to account for recent developments in the banking industry.

I am very eager to hear the staff’s recommendation as to how best to elicit such responses from the commenting public.

Before I turn the proceedings over to the staff of the Division of Corporation Finance to discuss their recommendation, I would like to thank the staff for their hard work and attention to detail. The staff has worked diligently to draft the request, and I am very grateful for their assistance.

In particular, I would like to recognize Shelley Parratt, Jim Daly, Lindsay McCord, Michael Seaman, Angela Connell, Stephanie Sullivan, Raquel Fox, Craig Olinger and Mark Kronforst in the Division of Corporation Finance; Bryant Morris and Connor Raso in the Office of General Counsel; Wes Bricker, Rachel Mincin, Rahim Ismail and Giles Cohen in the Office of the Chief Accountant; and Vanessa Countryman, Lauren Moore and Hari Phatak in the Division of Economic and Risk Analysis.  I also would like to thank Commissioner Stein and our counsels for their careful review and comment on this release.

Now, I will turn the meeting over to Jim Daly, Associate Director of the Division of Corporation Finance, for the staff’s recommendation.


[1] Louis D. Brandeis, “What Publicity Can Do,” Harper’s Weekly, Dec. 20, 1913, at 10, reprinted in Louis D. Brandeis, Other People’s Money and How the Bankers Use It 92, 92 (Frederick A. Stokes Co., 1914).

[2] Guides for Statistical Disclosure by Bank Holding Companies, Release No. 33-5735 (Aug. 31, 1976) [41 FR 39007] (Guide 3 Release). Guide 3 was originally published as Securities Act Guide 61 and Exchange Act Guide 3. In 1982, these guides were redesignated as Securities Act Industry Guide 3 and Exchange Act Industry Guide 3, respectively. See Rescission of Guides and Redesignation of Industry Guides, Release No. 33-6384 (Mar. 16, 1982) [47 FR 11476]. Guide 3 is not a Commission rule, nor does it bear the Commission’s official approval.

[3] For example, today, large bank holding companies may engage in insurance, investment management and broker-dealer activities that were limited or impermissible at the time of Guide 3’s publication. The Glass-Steagall Act, inter alia, contained provisions limiting commercial bank securities activities and affiliations with investment banks.  The Gramm-Leach Bliley Act, issued in 1999, repealed the anti-affiliation provisions of the 1933 Glass-Steagall Act and permitted banks to affiliate with companies engaged in broad range of financial activities. See Pub. L. No. 73-66, 48 Stat. 162 (1933); Pub. L. No. 106-102, 113 Stat. 1338 (1999).

[4] See Amendments to Industry Guide Disclosures by Bank Holding Companies, Release No. 33-6677 (Nov. 25, 1986) [51 FR 43594].

[5] Adoption of Integrated Disclosure System, Release No. 33-6383 (Mar. 3, 1982) [47 FR 11380].

[6] Business and Financial Disclosure Required by Regulation S-K, Release No. 33-10064 (Apr.13, 2016), available at https://www.sec.gov/rules/concept/2016/33-10064.pdf.

[7] Comment letters related to the Regulation S-K Concept release are available at https://www.sec.gov/comments/s7-06-16/s70616.htm.