Let’s Fix the SEC’s Open Corporate Financial Data–Not Eliminate Most of It


UPDATE: On September 8, 2014, Rep. Mike Fitzpatrick introduced a bill that included the same language exempting most companies from submitting financial statements to the SEC in XBRL. Rep. Fitzpatrick’s bill, H.R. 5405, is a package bringing together several changes to U.S. securities laws that previously received committee approval. Details: New Proposal Includes XBRL Exemption – and Major Setback for Open Data

Today the Coalition issued a letter calling on the House Financial Services Committee to direct the Securities and Exchange Commission (SEC) to fully enforce the quality of the financial disclosure data it collects, rather than eliminate open data reporting for most public companies. The joint letter follows the Committee’s March 14 approval of H.R. 4164, which would exempt companies under $250 million in annual revenue from existing requirements to file financial statements as machine-readable open data.
The SEC doesn’t apply quality control to corporate financial data.
H.R. 4164 is based on a flawed diagnosis that blames open data tools for the symptoms of poor data quality. Instead of decimating this critical data set, Congress should direct the SEC to stop accepting inaccurate submissions, so the data set becomes useful. Once the data set can be analyzed without costly corrections, analysts will be able to expand their coverage, and smaller public companies will get more attention. Our capital markets want quality data — not less of it.
Under H.R 4164, the SEC would stop requiring financial reports formatted in the eXtensible Business Reporting Language (XBRL) from companies under $250 million in annual revenue, regressing to a document-based system. The exemption would remove about 60% of publicly traded companies from existing open data reporting requirements.
Today’s letter asks the House Financial Services Committee to modify the proposal to direct the SEC to enforce data quality. If the SEC delivered more reliable data, companies would be able to benefit from expanded and more cost-effective coverage.