SEC should ensure investors get ‘truthful and useful’ information, commissioner tells CII conference

The Securities and Exchange Commission should do more to ensure that disclosure to investors is "truthful and useful," as opposed to information overload, Commissioner Kara M. Stein said Tuesday at the Council of Institutional Investors conference in New York.

Ms. Stein also called for the SEC to set up a digital disclosure task force consisting of investors, analysts, academics, companies and technology experts "to leverage today's technology for a modern disclosure system that is useful to investors. The commission must work to set forth acceptable standards that contribute to the provision of useful information to investors. Quite simply, the commission needs to focus on information that is relevant to today's investors. And, it goes without saying that the information must be trustworthy and credible," Ms. Stein said.

One example of where the SEC could improve disclosure is ESG, she said, noting the Oct. 2 petition by a group of institutional investors representing more than $5 trillion in assets for the SEC to require public companies to uniformly disclose environmental, social and governance information. Signers include the $351 billion California Public Employees' Retirement System, Sacramento; New York state Comptroller Thomas P. DiNapoli; Illinois Treasurer Michael W. Frerichs; Connecticut Treasurer Denise L. Nappier, Oregon Treasurer Tobias Read, the U.N. Principles for Responsible Investment; and U.S. SIF: The Forum for Sustainable and Responsible Investment.

Third-party providers already are collecting and assembling that information, and institutional investors, asset managers, financial institutions and other stakeholders increasingly are relying on these reports and ratings to measure and assess a company's ESG performance over time compared to peers, said Ms. Stein, who noted other countries already have enacted legislation requiring periodic reporting of ESG information.

Disclosure "is the biggest challenge today," agreed Chicago Treasurer Kurt Summers at the CII event.

"I think where we are in this country and around the world, we are in the early innings, not just on the quantity of disclosure … but also the quality and the depth of disclosure," Mr. Summers said.