A bill introduced in the U.S. Senate would make electronic delivery of documents to investors the default option, according to Financial Advisor.
Senators John Hickenlooper, a Colorado Democrat and Thom Tillis, a North Carolina Republican, are co-sponsoring the measure known as the Improving Disclosure for Investors Act of 2024.
Under the legislation, the Securities and Exchange Commission would be required to establish a means for investors to opt out of electronic delivery at any time and receive paper documents. As a result, e-delivery would become the standard method of sending investor communications.
“Today’s economy runs in the digital age, and we need to catch up,” Hickenlooper said. “Cutting red tape is as simple as going paperless.”
“U.S capital markets have embraced the digital age and rely on far less paper now than they did 20 years ago, and it is past time that we bring disclosure requirements into the 21st century,” Tillis said. “This commonsense legislation will heighten efficiency and cut down on paper while preserving investors’ ability to receive hard copies.”
Currently, the SEC permits electronic delivery of only certain documents. But according to Tillis and Hickenloooper, electronic delivery is subject to requirements that a registrant provides notice that the information is available electronically, the investor has adequate access to such information, and the registrant either obtains evidence to show actual delivery or obtains informed consent from the investor. The lawmakers said these rules have not been updated in 20 years.
Similar legislation making e-delivery the default option has been passed by the House Financial Services Committee.
If it is passed and signed into law, the SEC would be required to propose rules within 180 days and to finalize them within one year.
Hickenlooper and Tillis said major financial firms including Fidelity and Charles Schwab are in favor of the measure. Fidelity released a statement saying, “In the 21st century American investors deserve a more engaging, secure, and timely standard to receive information in line with digital-first policies at the Department of Labor, Thrift Savings Plan, Social Security Administration, and Internal Revenue Service.”
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