Enhancing the Public Company Disclosure Framework

Thank you, Dave [Lynn], for that kind introduction.[1] I appreciate the opportunity to deliver the Alan B. Levenson Keynote Address, named in honor of the former director of the Division of Corporation Finance (Corp Fin). Alan started his service at the Commission during the tenure of Chairman Edward “Ned” Gadsby, who was appointed by President Eisenhower.[2] During his service, the Commission and its staff operated in a very different manner. It is hard to imagine a Corp Fin staff member today questioning a notorious figure such as former Teamsters president Jimmy Hoffa in a public hearing—but that is what Alan was able to do.

For lawyers involved in capital markets transactions, the annual Securities Regulation Institute organized by the Northwestern School of Law has become an important gathering. For those of us at the SEC, it represents an opportunity to engage with experienced securities law practitioners who can provide valuable feedback needed to develop sound regulatory policies. This is especially true as we revisit our rulebook to promote its effectiveness and reduce compliance burdens where regulatory obligations do not provide commensurate benefits for investors or our markets.

The obligation to weigh burdens versus benefits is not a personal preference or philosophy of mine. In fact, it is a legislative mandate. Congress tasked the SEC with this exact objective when it passed the National Securities Markets Improvement Act of 1996 (NSMIA).[3] NSMIA directs the Commission to consider whether an action will promote capital formation “whenever we are required to consider the impact of an action upon investor protection pursuant to a rulemaking function.”[4] It is unfortunate that the prior administration downplayed this directive, given the many misguided rulemakings that were proposed and adopted during that period.

(more…)