Investor Advocates Laud More SEC Disclosure

Investor advocates welcomed a move by the Securities and Exchange Commission to make public its staff’s comments to companies about their financial reports, stock offerings and other required disclosure documents.

“They’re moving in the right direction,” Barbara Roper, director of investor protection for Consumer Federation of America, said Friday. “It’s a pretty remarkable level of transparency.”

The SEC announced Thursday that in August it would begin publishing on its website the comment letters from its staff to companies and mutual funds, as well as their responses to the SEC examiners.

In some instances, information deemed confidential will be withheld.

The move opens a window for investors into the concerns, big and small, of the examiners who pore over thousands of pages of company filings, and the related exchanges between the agency staff and the companies.

Consumer advocates called the decision unusual because it provides access to the sort of deliberations that generally are kept private.

This gives “investors the kind of information that’s usually reserved for company insiders and lawyers,” said Ed Mierzwinski, consumer program director at Public Interest Research Group. “Other agencies should follow this lead to protect consumers.”

The SEC noted in its announcement that it had been deluged in recent months with thousands of requests for the comment letters and companies’ responses under the Freedom of Information Act.

Some firms have made a business of submitting FOIA requests for the material and, after obtaining it from the SEC, selling it to clients.

The fallout from a wave of corporate scandals has also focused attention on regulatory filings.

The material will be publicly released 45 days or more after the agency examiners complete their review of a company’s filing.