SEC Releases Proposal on E-Delivery of Regulatory Documents

On July 16, the Securities and Exchange Commission (SEC) released a rule proposal titled, “Electronic Delivery of Information Under the Federal Securities Laws.” According to an SEC press release, the rule "would expand the ability of issuers, broker-dealers, investment advisers, and others to use electronic delivery to satisfy information delivery requirements under the federal securities laws.”

The proposal would permit, but not require, investment firms to use e-delivery as the default method to deliver documentation to shareholders. According to the release, there would be two permissible delivery methods. The first would be direct delivery, sending materials directly to the individual, but this is only available if there is not personal financial information included. The second method of delivery requires an email that indicates a “Statement of Availability” is accessible and directs the individual to a secure website to review those materials. The e-delivery proposal would extend to proxy statement materials, prospectuses, annual reports, shareholder reports, and other notices. Covered entities would include public companies, broker-dealers, registered investment companies, investment advisers, and transfer agents, among other entities. Investors may still receive paper copies of documents free of charge, by opting out of e-delivery. Included entities are required to send an initial paper notice at least 180 days before the transition and then send a follow-up notice 30 days prior to the transition, as well as provide clear instructions on how shareholders may opt-out of e-delivery to receive paper statements or update their electronic delivery address.

In a statement, SEC Chair Paul Atkins stated, “Regulation E-Delivery is not merely a proposed administrative adjustment; it represents a meaningful advancement toward aligning our rules with the needs of today’s markets.” Public comments will be received by the Commission for a 60-day period beginning on the date of publication in the Federal Register.  

Click here to review the e-delivery rule proposal.

Click here to read the SEC’s press release covering the proposal.

Click here to read a client alert from Morgan Lewis.