[Congressional Record Volume 160, Number 145 (Tuesday, December 2, 2014)]
[House]
[Pages H8258-H8260]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




        DISCLOSURE MODERNIZATION AND SIMPLIFICATION ACT OF 2014

  Mr. GARRETT. Mr. Speaker, I move to suspend the rules and pass the 
bill (H.R. 4569) to require the Securities and Exchange Commission to 
make certain improvements to form 10-K and regulation S-K, and for 
other purposes, as amended.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                               H.R. 4569

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Disclosure Modernization and 
     Simplification Act of 2014''.

     SEC. 2. SUMMARY PAGE FOR FORM 10-K.

       Not later than the end of the 180-day period beginning on 
     the date of the enactment of this Act, the Securities and 
     Exchange Commission shall issue regulations to permit issuers 
     to submit a summary page on form 10-K (17 C.F.R. 249.310), 
     but only if each item on such summary page includes a cross-
     reference (by electronic link or otherwise) to the material 
     contained in form 10-K to which such item relates.

     SEC. 3. IMPROVEMENT OF REGULATION S-K.

       Not later than the end of the 180-day period beginning on 
     the date of the enactment of this Act, the Securities and 
     Exchange Commission shall take all such actions to revise 
     regulation S-K (17 C.F.R. 229.10 et seq.)--
       (1) to further scale or eliminate requirements of 
     regulation S-K, in order to reduce the burden on emerging 
     growth companies, accelerated filers, smaller reporting 
     companies, and other smaller issuers, while still providing 
     all material information to investors;
       (2) to eliminate provisions of regulation S-K, required for 
     all issuers, that are duplicative, overlapping, outdated, or 
     unnecessary; and
       (3) for which the Commission determines that no further 
     study under section 4 is necessary to determine the efficacy 
     of such revisions to regulation S-K.

     SEC. 4. STUDY ON MODERNIZATION AND SIMPLIFICATION OF 
                   REGULATION S-K.

       (a) Study.--The Securities and Exchange Commission shall 
     carry out a study of the requirements contained in regulation 
     S-K (17 C.F.R. 229.10 et seq.). Such study shall--
       (1) determine how best to modernize and simplify such 
     requirements in a manner that reduces the costs and burdens 
     on issuers while still providing all material information;
       (2) emphasize a company by company approach that allows 
     relevant and material information to be disseminated to 
     investors without boilerplate language or static requirements 
     while preserving completeness and comparability of 
     information across registrants; and
       (3) evaluate methods of information delivery and 
     presentation and explore methods for discouraging repetition 
     and the disclosure of immaterial information.
       (b) Consultation.--In conducting the study required under 
     subsection (a), the Commission shall consult with the 
     Investor Advisory Committee and the Advisory Committee on 
     Small and Emerging Companies.
       (c) Report.--Not later than the end of the 360-day period 
     beginning on the date of enactment of this Act, the 
     Commission shall issue a report to the Congress containing--
       (1) all findings and determinations made in carrying out 
     the study required under subsection (a);
       (2) specific and detailed recommendations on modernizing 
     and simplifying the requirements in regulation S-K in a 
     manner that reduces the costs and burdens on companies while 
     still providing all material information; and
       (3) specific and detailed recommendations on ways to 
     improve the readability and navigability of disclosure 
     documents and to discourage repetition and the disclosure of 
     immaterial information.
       (d) Rulemaking.--Not later than the end of the 360-day 
     period beginning on the date that the report is issued to the 
     Congress under subsection (c), the Commission shall issue a 
     proposed rule to implement the recommendations of the report 
     issued under subsection (c).
       (e) Rule of Construction.--Revisions made to regulation S-K 
     by the Commission under section 3 shall not be construed as 
     satisfying the rulemaking requirements under this section.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from New 
Jersey (Mr. Garrett) and the gentlewoman from Wisconsin (Ms. Moore) 
each will control 20 minutes.
  The Chair recognizes the gentleman from New Jersey.


                             General Leave

  Mr. GARRETT. Mr. Speaker, I ask unanimous consent that all Members be 
given 5 legislative days within which to revise and extend their 
remarks and include extraneous materials for the Record on H.R. 4569, 
as amended, that is currently under consideration
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from New Jersey?
  There was no objection.
  Mr. GARRETT. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I rise now in support of H.R. 4569, which is the 
Disclosure Modernization and Simplification Act of 2014. Having access 
to the U.S. capital markets and the broad investor base that comes with 
it is vital--literally vital--for U.S. companies to be able to grow 
their businesses and create jobs in this country.
  Over time, as our securities laws have continued to grow and evolve, 
the number of new SEC rules and regulations that have been weighing 
down on public companies continue now to multiply, and it is becoming 
more and more difficult and costly for small businesses to succeed and 
eventually go public.
  Many of the disclosure rules that have been added over time are both 
duplicative and are no longer needed due to many technological 
advancements that we are all familiar with. And yet the SEC has taken 
little action to review these unnecessary and outdated regulations and 
to make appropriate changes to help U.S. companies and also investors.
  So we have H.R. 4569 before us, and it seeks to do what? It removes 
some of the outdated and unnecessary red tape and allows for the small 
companies and investors to benefit from a more streamlined and 
efficient public disclosure regime.
  Specifically, the legislation would direct the SEC to simplify the 
public company disclosure regime for issuers and investors by 
permitting the issuers to submit a summary page of annual reports on 
Form 10-Ks with cross references to the contents of the report. It is 
that simple.
  Because the typical 10-K filed by issuers is hundreds of pages long 
and

[[Page H8259]]

written in legalese, investors do find it difficult to locate and to 
digest the truly important information about the company in the report. 
So permitting issuers to submit a summary page would enable companies 
to concisely disclose pertinent information to investors without 
exposing them to liability.
  This summary page would also enable investors to more easily access 
the most relevant information about that company.
  This legislation would also direct the SEC to revise Regulation S-K--
``Reg S-K,'' it is called--to better scale disclosure rules for 
emerging growth companies and smaller issuers, and to eliminate other 
duplicative, outdated, or unnecessary Reg S-K disclosure rules for all 
issuers.
  In testimony before the Capital Markets Subcommittee, one witness 
stated: ``The burdens imposed by existing regulation, primarily Reg S-K 
and Reg S-X, effectively deny small companies access to the public 
market and make investors less willing to invest.''
  He added: ``This bill, H.R. 4569, is very constructive, and the 
Commission is likely to be receptive to it. It might well launch a 
process that would substantially reduce unneeded impediments to smaller 
firms being able to access the public capital markets.''
  Additionally, another commenter testified:

       Over the course of time, proxies have become voluminous, 
     some required disclosures have becomes obsolete, and the 
     delivery of information has changed, though the legal 
     mandated forms of disclosure have not.
       This situation has commonly been referred to as 
     ``disclosure overload'' and it is apparent that investors are 
     not being given information in a decision-useful manner and, 
     in some cases, they are simply overwhelmed with non-relevant 
     information.
       Even SEC Chair Mary Jo White has, on several occasions, 
     stated that a review of our current disclosure system is a 
     top priority for the Commission this year. So this bill would 
     help augment the SEC's effort by requiring the Commission to, 
     first, eliminate wholly unnecessary or outdated disclosure 
     requirements and to allow issuers to include a summary of 
     material in the form 10-K.

  So this legislation builds on section 108 of the Jumpstart Our 
Business Startups bill--you remember that, the JOBS Act--which directed 
the SEC to study Reg S-K in order to simplify and modernize disclosure 
rules. The SEC completed the study in December of 2013. Unfortunately, 
the study proposed few substantive reform measures. Instead, it 
recommended further study of Reg S-K disclosure rules.
  Let me conclude with this. Given our continued economic difficulties, 
I believe we need to stop studying and start taking action. Simplifying 
and streamlining disclosure requirements will enable companies to 
divert fewer resources to compliance, freeing up additional capital to 
create American jobs.
  Mr. Speaker, I reserve the balance of my time.
  Ms. MOORE. Mr. Speaker, I yield myself such time as I may consume.
  I rise in strong support of Mr. Garrett's bill, H.R. 4569, which was 
favorably reported from the House Financial Services Committee, and 
championed by my friend from New York (Mrs. Maloney).
  I would like to associate myself with the long and extended 
explanation by Mr. Garrett of New Jersey, and just to say, Mr. Speaker, 
that, in short, this bill will make disclosures that public companies 
make more streamlined, manageable, and user friendly.
  I really appreciate the participation of my good friend, 
Representative Maloney, who really worked hard to make sure that this 
legislation was balanced and it included language to emphasize that we 
needed to reduce burdens on companies, but we need to preserve 
investment protection.
  So, given the changes that Mrs. Maloney made with the Maloney 
amendment, I strongly support the legislation, would urge all my 
colleagues to support it, and I yield back the balance of my time.
  Mr. GARRETT. Mr. Speaker, I thank the gentlelady for her assistance 
in this matter.
  Also, you made reference to Mrs. Maloney from New York for her work 
as well. She is not on the floor right now, but I certainly do 
appreciate her efforts with the legislation and in full committee and 
in subcommittee as well in order to move forward on this piece of 
legislation before the House, H.R. 4569.
  And to your comment about perhaps I should have taken the substance 
of the bill to heart, I did streamline the 10 pages down to four pages 
to make it not duplicative, unnecessary, and outdated information.
  Mr. Speaker, I yield such time as she may consume to the gentlewoman 
from New York (Mrs. Maloney).
  Mrs. CAROLYN B. MALONEY of New York. Mr. Speaker, I want to thank my 
colleague for his hard work on this bill. I did want to come to the 
floor and support it because it is one of the areas where we did work 
together in a positive way.


 =========================== NOTE =========================== 

  
  December 2, 2014, on page H8259, the following appeared: New 
York (Mrs. MALONEY). Mrs. CAROLYN B. MALONEY. Mr. Speaker, I want 
to thank my colleague
  
  The online version should be corrected to read: New York (Mrs. 
MALONEY). Mrs. CAROLYN B. MALONEY of New York. Mr. Speaker, I want 
to thank my colleague


 ========================= END NOTE ========================= 

  I would like to also take this opportunity to congratulate him on 
being reappointed as chairman of the Capital Markets Committee on which 
I serve. And I look forward to working with you in the next Congress.
  When the Financial Services Committee marked up the JOBS Act in 2012, 
Mr. Garrett included an amendment requiring the SEC to conduct a study 
on how to modernize and simplify the disclosure process for emerging 
growth companies.
  The SEC published that study last December, and while the study 
failed to make any specific recommendations on how to streamline the 
disclosure process, it did provide, I thought, a very fascinating 
history of all the different efforts to simplify registration and 
disclosure processes, especially for smaller companies, which is a 
concern for many Members of this Congress who want to relieve the 
regulatory burden on particularly smaller companies.

                              {time}  1530

  For example, here are some of the studies that they did: the SEC's 
1969 Disclosure Policy Study; the 1977 Advisory Committee on Corporate 
Disclosure; the simplified Form S-18 for small companies in 1979; a new 
simplified Form S-B in 1992; the 1996 Task Force on Disclosure 
Simplification; the 2005 Advisory Committee on Smaller Public 
Companies; the Advisory Committee on Improvements to Financial 
Reporting in 2007; and, most recently, the Advisory Committee on Small 
and Emerging Companies.
  What this history demonstrates is that the process of scaling and 
streamlining the reporting requirements for smaller companies is 
something that we all need to focus on in order to keep pace with the 
ever-evolving marketplace, and it is one that historically has been 
revisited every 7 to 10 years. It requires strong oversight by the SEC 
and also by Congress.
  I believe that now is an excellent time for the SEC to revisit the 
disclosure requirements for smaller companies and to figure out how to 
best modernize these requirements. This bill directs the SEC to build 
on its 2013 study by making immediate improvements to reg S-K in the 
short term and then by making specific and detailed recommendations on 
how to simplify and modernize reg S-K in the long term.
  We were able to work in a bipartisan manner on this bill to clarify 
that any revisions the SEC makes should reduce burdens on small 
businesses, while also ensuring that investors still have access to all 
important information.
  This bill will ensure that the SEC properly tailors its regulations 
to the needs of small businesses and doesn't get caught up in a one-
size-fits-all reaction. I urge my colleagues to support this 
commonsense bill.
  Mr. GARRETT. I thank the gentlewoman for her efforts.
  Mr. Speaker, at this point, I yield 2 minutes to the gentleman from 
Indiana (Mr. Stutzman).
  Mr. STUTZMAN. Mr. Speaker, I rise today in strong support of the 
Disclosure Modernization and Simplification Act of 2014.
  For far too long, our economy has remained weak, and small businesses 
and wage earners have suffered greatly. Part of the reason they have 
suffered is from too many regulations and from an increase in red tape 
from Federal Government agencies, which has hindered growth and kept 
businesses from expanding. They also present big challenges for startup 
companies that are looking to gain solid footing in this shaky economy.
  If we are going to move this country in the right direction, we need 
to make it easier and not harder for Americans to do business. The 
least we can do in Washington is to make sure Federal regulators do not 
force business managers to report the same information over and over. 
That is what this act is all about.

[[Page H8260]]

  This legislation, along with others we will consider today, will help 
remove the Federal Government from the backs of small business owners 
and make it easier for all Americans to succeed.
  It will revise regulations to include startup companies, to eliminate 
redundant and duplicative provisions, and to discourage the disclosure 
of immaterial information, among other simplifications. Now is the time 
to remove these roadblocks on the pathway to success.
  The American people are looking for us to ease some of these painful 
economic burdens, and today, we have an opportunity to support 
legislation that will have a positive impact on our economy, that which 
limits the challenges on small business owners and job creators.
  Let's work together in this Chamber and pass this series of bills in 
a bipartisan fashion. Let's show our constituents that we are serious 
about recharging our economic engine by pursuing commonsense regulatory 
reforms.
  I would like to thank Chairman Hensarling, Representative Garrett, 
Representative Hurt, and the rest of the members of the Financial 
Services Committee, who worked hard on this issue. I urge my colleagues 
in the House to support this legislation.
  Mr. GARRETT. I appreciate the gentleman's coming to the floor. More 
importantly, I appreciate the gentleman's efforts and hard work on this 
legislation in committee. Thank you very much.
  Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from New Jersey (Mr. Garrett) that the House suspend the 
rules and pass the bill, H.R. 4569, as amended.
  The question was taken; and (two-thirds being in the affirmative) the 
rules were suspended and the bill, as amended, was passed.
  A motion to reconsider was laid on the table.

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